Understanding Life Insurance Table Ratings

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.

"Table ratings can be given for medical and non-medical conditions," says Thomas Bigoski, owner of the Bigoski Insurance Agency in Gainesville, Va. "Some examples include high blood pressure, cancer, diabetes and your combined height and weight, especially obesity. Other issues could be a history of mental illness or your occupation." (See: "How much can you save on life insurance by losing weight?")

A life insurance applicant with a history of multiple convictions for driving under the influence or someone who pilots small planes could also receive a table rating, says Maureen Leydon, vice president and chief underwriter for MetLife in Boston.

Anything that increases the likelihood of premature death can trigger a table rating.

Table ratings and insurance premiums

Bigoski says table ratings add to the applicant's premiums incrementally, typically by 10, 25 or 50% above the standard premium. (See: "That'll cost ya: 7 deadly insurance sins.")

"For example, if a standard premium for a term life policy is $100, if someone has a table rate of 1, they might pay 25% above the standard rate, or $125 per month," says Bigoski. "If they have a table rate of 2 they might pay 50% above the standard rate, or $150 per month."

Leydon says that the size of the premium increase varies by insurance company and by life insurance product.

Life insurance companies typically assign debits and credits based on your medical history and other factors when calculating your premiums. For instance, if you have heart disease or cancer, that would be a debit -the more debits you have, the more costly your premiums. If, however, you receive a credit for healthy blood pressure and cholesterol, these credits would decrease your premium.

What's important to know about the process is that each insurer sets its own guidelines for debits and credits. How they are assessed depends on the company's particular underwriting guidelines.

"So the same applicant will not necessarily have the exact same table rating at every insurance company," says Bigoski.

Life insurance application options

If you have a table rating, it is not necessarily permanent, depending on the reason for the rating.

"Most companies will offer you an option to reapply, typically two years after the life insurance policy has been issued, to see if your table rating can be lowered," says Leydon. "For instance, if the issue was that you were overweight and now you have maintained a lower weight for a year, you can reapply."

Type II diabetes typically gets progressively worse, but if your doctor can provide evidence that you have the disease under control and are exercising regularly, your table rating might be reduced, she says.

To get a reduction, Leydon says that consumers would need to apply for reduced premiums or a reduction in the table rating and then the insurance company would review the applicant's medical records and any other pertinent information. Some life insurance policies are designed so that your premium is automatically reduced once you reach a particular policy anniversary date or a certain age, such as 80.

Can you negotiate a table rating?

Bigoski says that consumers have the right to an explanation from the insurance company as to why they are getting a table rating.

"You can request to be underwritten again and write a letter of explanation as to why you think the table rating is not accurate," says Bigoski, "but you really cannot negotiate with the insurance company for a change in your premium. Insurance companies have to stay true to their mortality tables for underwriting purposes."

Although negotiating the premium may not be an option, Leydon says you can provide evidence -- such as a negative stress test or treatment for a condition that the insurance company can evaluate -- to potentially change the table rating.

Independent insurance agents can often direct a customer to another insurance company that offers a lower premium for particular conditions.

"A consumer could do this themselves, but the research would be daunting," says Leydon. "A broker may already know of particular companies or can ask an insurance company for a preliminary or informal quote to get an idea of the premium increase for a particular condition."

Bigoski says some insurance companies are less likely to charge a higher premium for someone who is slightly obese, for example, than other companies.

Another example is insurance companies that may assess a lower table rating for Type II diabetes, as long as it was diagnosed at a later age, he says.

The original article can be found at Insurance.com:Understanding life insurance table ratings