Oklahoma · Casualty Insurance Sample Interactive Mind Map
Rated Policies
A visual breakdown of Rated Policies — one of the concepts you can count on seeing on the exam.
The TESTivity Interactive Mind Mapping Graphic we picked for the Oklahoma Casualty Insurance sample is Rated Policies — and this is a concept you can count on seeing on your pre-licensing exam. Get the structure straight once and those questions turn into free points.
So explore it. Click through, see how the pieces relate, and let the layout do some of the remembering for you.
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Tier 1 of 3 — Best rating
Preferred
Better-than-average health → better-than-average premium
💚 Premium discount
Who qualifies
Applicants with better-than-average health and a longer-than-average life expectancy. Excellent medical history, healthy weight, non-smoker, no dangerous occupations or hobbies.
Premium impact
Preferred applicants receive a premium discount — they pay less than the standard rate. The insurer rewards low-risk applicants with lower pricing to win their business.
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Longer than average life expectancy
The actuarial tables predict this person will live longer than the average person their age. Fewer expected claims, better loss experience — insurer rewards that with lower pricing.
✅
Typical preferred criteria
Non-smoker for 3–5+ years · Healthy BMI · No significant medical conditions · Clean family history · Favorable blood pressure and cholesterol · No hazardous occupation or extreme hobbies.
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Real-world analogy
Like a "safe driver discount" on auto insurance. You've proven you're lower risk than average — so the insurer charges you less. Preferred is the insurer saying "we want your business at a competitive price."
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Exam tip
Preferred = discount off the standard premium. Know: preferred applicants have a longer than average life expectancy. The insurer benefits because this person is statistically unlikely to claim early.
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Tier 2 of 3 — Average rating
Standard
Average health → base premium calculated by age & gender
📊 Base rate applies
Who qualifies
Applicants with average health — typical medical history, average weight, no significant conditions that meaningfully raise or lower their risk profile. The majority of applicants fall here.
Premium impact
Pays the standard (base) premium — calculated on age and gender using actuarial mortality tables. This is the published rate; neither discounted nor surcharged.
📊
Premium based on age and gender
The standard premium is the actuarial baseline — the expected cost of insuring a person of that age and gender with average health. A 35-year-old female standard risk pays what actuarial tables say a 35-year-old female should pay.
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The benchmark
Standard is the reference point. Preferred is below it (discount). Substandard is above it (surcharge). Everything in rating is measured relative to the standard rate.
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Most applicants land here
The majority of applicants receive a standard rating. The insurer has determined their health profile matches the average assumptions built into the base rate — no adjustment needed in either direction.
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Exam tip
Standard = average health, base premium by age and gender. No modification up or down. The exam may describe a standard applicant as having "average health" or "average life expectancy" — that's the trigger for this classification.
⚠️
Tier 3 of 3 — Below-average rating
Substandard
Below-average health → above-standard premium (rated up)
🔺 Premium surcharge
Who qualifies
Applicants with below-average health — medical conditions, dangerous occupations, hazardous hobbies, or other factors that increase the statistical probability of an early claim.
Premium impact
Any substandard rating increases the premium above the standard rate. The insurer still issues coverage but charges more to compensate for the elevated risk. Three methods are used to calculate the surcharge.
🔺 Three Methods to Calculate the Substandard Surcharge
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Rate-up Age
Also called "age rating"
The insurer prices the policy as if the applicant is older than they actually are. If a 40-year-old has a condition that makes them a higher risk, the insurer may rate them as a 47-year-old — charging a 47-year-old's premium to a 40-year-old.
Example
40-year-old applicant with a heart condition rated up 7 years → pays the premium of a 47-year-old. Simple and transparent — based on existing age/rate tables.
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Extra Percentage Premium
Percentage surcharge on base rate
The insurer adds a percentage surcharge on top of the standard premium. If the standard rate is $100/month, a 25% extra percentage premium results in a $125/month charge. The surcharge is proportional to the base rate.
Example
Standard premium: $100/month. Extra percentage: 25%. New premium: $125/month. As the standard rate changes (at renewal), the surcharge amount changes proportionally.
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Flat Extra Premium
Fixed dollar surcharge per $1,000 of coverage
A fixed dollar amount is added per $1,000 of coverage — regardless of the base premium. Often used for temporary or specific risks (hazardous occupation, dangerous hobby). The flat extra may be removed if the risk goes away.
Example
Applicant is a commercial deep-sea diver: flat extra of $5 per $1,000 of coverage. $500,000 policy = $2,500/year flat extra on top of the standard premium. If they change careers, the flat extra is removed.
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Exam tip
Know all three methods and when each is used. Rate-up age = acts older than they are. Extra percentage = % on top of base rate. Flat extra = fixed dollars per $1,000 of coverage — often for temporary or specific risks that can be removed later. Any substandard rating = higher premium, not denial of coverage.
More to explore
Dig Deeper
All 3 Tiers Compared
Scenario Quiz
Factor
⭐ Preferred
📋 Standard
⚠️ Substandard
Health status
Better than average
Average
Below average
Life expectancy
Longer than average
Average
Shorter than average
Premium vs standard
Lower ↓ — discount
Base rate — age & gender
Higher ↑ — surcharge
Surcharge method
None — discount applied
None — base rate
Rate-up age · Extra % · Flat extra
Coverage issued?
✓ Yes
✓ Yes
✓ Yes — at higher rate
The Rating Spectrum
Best health
Lowest premium Average health
Base premium Highest risk
Highest premium
Lowest premium Average health
Base premium Highest risk
Highest premium
⭐
Preferred
Premium discount
Longer life expectancy
Longer life expectancy
📋
Standard
Base rate by age & gender
Average health
Average health
⚠️
Substandard
Rate-up · Extra % · Flat extra
Still issued coverage
Still issued coverage
⚠️
Substandard ≠ Declined
A substandard rating means the insurer will issue coverage — just at a higher premium. The applicant is not being turned away. Being declined (rejected outright) is separate from being rated substandard. The exam may try to blur this distinction — know it cold.
The insurer has three options: issue standard, issue substandard (rated up), or decline. Substandard is the middle ground — coverage with a surcharge.
The insurer has three options: issue standard, issue substandard (rated up), or decline. Substandard is the middle ground — coverage with a surcharge.
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Top Exam Tips — Rated Policies
1. Preferred = longer than average life expectancy → premium discount. Better health = lower price.
2. Standard = average health → base premium calculated by age and gender. The benchmark everything else is measured against.
3. Substandard = below-average health → higher premium. Coverage IS issued — just rated up.
4. Three surcharge methods: Rate-up age (priced as older) · Extra percentage (% added to base) · Flat extra (fixed $/per $1,000 of coverage).
5. Flat extra is often temporary — used for specific, removable risks like hazardous occupations or activities.
6. Substandard ≠ Declined. The insurer still issues the policy. Declined = no coverage at all.
2. Standard = average health → base premium calculated by age and gender. The benchmark everything else is measured against.
3. Substandard = below-average health → higher premium. Coverage IS issued — just rated up.
4. Three surcharge methods: Rate-up age (priced as older) · Extra percentage (% added to base) · Flat extra (fixed $/per $1,000 of coverage).
5. Flat extra is often temporary — used for specific, removable risks like hazardous occupations or activities.
6. Substandard ≠ Declined. The insurer still issues the policy. Declined = no coverage at all.
Exam vocabulary
Key Terms to Know
Preferred Risk
An applicant with better-than-average health and longer-than-average life expectancy. Receives a premium discount below the standard rate.
Standard Risk
An applicant with average health. Pays the base premium calculated by age and gender per actuarial tables. The benchmark classification.
Substandard Risk
An applicant with below-average health or elevated risk factors. Coverage is issued at a premium above the standard rate.
Rate-up Age
Substandard method: prices the policy as if the applicant is older than their actual age, using a higher age bracket's rate.
Extra Percentage Premium
Substandard method: adds a percentage surcharge on top of the standard base premium (e.g. standard + 25%).
Flat Extra Premium
Substandard method: a fixed dollar amount per $1,000 of coverage added to the standard premium. Often used for temporary or specific risks.
Like learning this way? There's a whole library of them.
If the old manual you inherited from the office breakroom isn't cutting it and this format fits how your brain actually works, you'll want the rest. There are 55 Interactive Mind Maps like this one in the TESTivity Platinum Casualty Insurance package — covering the full curriculum, right alongside the practice questions, exam simulators, and study guides.
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Studying for a different state?
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