Everyone who applies for life insurance is assessed for coverage. Insurance companies provide coverage and premium rates in accordance with an applicant’s risk level. This means that insurance companies will typically place applicants in categories relative to their risk, which involves their health and lifestyle choices. For example, smoking is considered a health risk and will have an impact on which category an applicant will be assigned. Sometimes a person, due to health issues or lifestyle factors, may not fit into standard categories and will instead be assigned to a table rating.
In life insurance lingo, a “table rating” refers to the life insurance premiums charged to people who cannot qualify for standard rates. Life insurance companies identify their tables in various ways – such as Table 1, 2, 3 and above or Table A, B, C, etc.
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Table ratings can be given for medical or non-medical conditions. Some table rating examples include:
- High blood pressure
- Alcohol or tobacco use
- History of cancer or a disease
- Body Mass Index (BMI)
- Criminal record
- Driving history report
- Hobbies or activities
Upon completing a medical exam, your insurer will look at your test results as well as family health history and lifestyle choices to fit you into a classification or category.
Though the verbiage from company-to-company may differ, most applicants seeking life insurance will fall into one of the following categories:
- Preferred select (or plus)
- Preferred smoker
- Standard select (or plus)
- Standard smoker
Many applicants do not fall into these categories yet are still eligible for coverage. Their health issues or lifestyle choices may prevent them from falling into a standard classification, but they can still be rated in accordance with their coverage risks.
This is where table ratings will come into play. Along with a risk category, an applicant will be given a table rating with either a number or letter to designate their rating. Depending on that rating, the applicant will pay an additional percentage if approved for a life insurance policy.
Table ratings are usually designated as Tables A-J or 1-10. Generally speaking, each additional table increase is usually a 25 percent increase over the standard risk class rates.
Consumers have the right to an explanation from the insurance company as to why they are getting a certain risk classification or table rating. However, negotiating the premium may not be an option. The consumer does have the right to present evidence to potentially change the rate or remove the table rating.
If a customer is working with a licensed life insurance agent, the agent may direct a customer to another insurance company that may offer a lower premium for his or her particular condition or circumstance. Another option to help decrease the premium amount is to either lower the face value or lower the term limit.