Retail Pricing: Policies identified as retail are designed to be available to the broadest possible market, and are priced for large, non-selective risk-pools of individual policyholders that rely on the "Law of Large Numbers" to provide the insurer with the greatest predictability in claims experience, but at the expense of averaging claims costs for high- and low-risk segments of the pool as well as higher operating expenses per policy. As such, retail policies are characterized by low minimum policy face amounts and/or low minimum premium requirements, and high cost of insurance charges, and/or high fixed administration expenses, and/ or high premium loads, and/or high cash-value-based "wrap fees", and/or high termination fees (i.e., surrender charges).
Risk Class: The level of cost of insurance charges assessed against the policy or the gross premium rate. Based on the information submitted with the application, the policy is categorized into a preferred, standard, or substandard (impaired) risk class. Policies can also be issued in preferred plus classifications. These generally mean that the insured demonstrates superior health characteristics in addition to being a nonsmoker, such as frequent exercise or having a family history of longevity.