Life insurance companies work by accurately assessing the odds of a person dying, and offering coverage to those people at prices proportional to the risk of that person’s death.
If you apply for life insurance and the insurance company determines you carry more risk than average, you may be table rated. A table rating is an increase in price based on the severity of your risk.
How Table Ratings Work
Basically, insurers assign “risk points” to every applicant based on the number of factors they have that may impact their mortality. For example, someone with a history of reckless driving will have more risk points against them than someone with a clean driving record.
Insurance companies also calculate these points based on the severity of the risk factors. For example, an applicant who recently had a heart attack is riskier than an applicant with a higher-than-average BMI.
The more risk points they give you, the higher your table rating. The higher your table rating, the higher the cost of the policy.
The following are a few factors that can result in a table rating from an insurance company. It’s not a complete list by any means, but these are some of the most common issues we see:
- Having a history of heart disease or cancer
- Type 1 or type 2 diabetes
- Some mental health illnesses, like severe depression and anxiety
- History of heart attack or stroke
- Criminal record
Having one of these factors does not mean you can’t get life insurance nor does it mean you’ll automatically be table rated. A good life insurance broker will shop your case to different insurance companies to find the best match.
Understanding Your Table Rating
A table rating is used to modify the price that comes with a normal risk class, and they are most often paired with either the Standard Non-Tobacco or Standard Tobacco risk classes, since the risk factors that lead to table ratings will almost always keep you from getting a best class offer.
For example, for a 30-year-old male applying for $500,000 in coverage for 20 years, a best class policy would cost around $240 per year. However, if the applicant was table rated, the rating would most likely be applied to a Standard class offer, which has a baseline cost of around $460. The extra cost associated with the table rating is then added to the Standard baseline cost.
Table ratings are often listed as letters (for example, Table A to Table J), or as numbers (Table 1 to Table 10) depending on the carrier. Lower ratings like Table 1 and Table A are the least costly, and higher ratings like Table 10 and Table J are riskier to insure, and therefore the most costly.
While some insurers treat table ratings a little differently, for the most part, each table rating adds an extra 25% to the final cost of the policy.
Life Insurance Table Ratings Chart
This table illustrates the rate increases that would come with a policy approved at a table rating. To keep things simple, we’re going to round up and assume that our example policy approved for Standard rates would cost $500 annually.
|Table Rating||Percent Extra||Final Annual Price|
|Standard (no rating)||0%||$500|
See what you’d pay for life insurance
What to Do if You’re Offered a Table Rating
Insurance carriers offer table ratings to ensure that they can cover as many people as possible, and that even people with complicated histories can have access to life insurance. Not all insurers treat every table rating case the same, and shopping around is one way to potentially lower your price.
If you’re working with a broker who has advocated for you and your only option for coverage requires a table rating, you have a decision to make. Accept the coverage or walk away. Let’s discuss these options.
Option 1: You choose to accept the table rating offer and take the policy.
If you were table rated due to a situation that has the potential to get better over time, we suggest that you accept the policy at the table rated risk class for the time being.
If you accept the offer and pay the premium, your life insurance coverage is immediate. If your situation improves over time, many insurance companies will allow you to re-apply to bring down your rates.
If your health worsens over time, you’ll be glad you accepted the coverage. Once your policy is inforce, your life insurance company cannot drop you, cancel your coverage, or raise your premiums due to a health issue.
Option 2: You choose not to accept the policy offer.
If you don’t accept the table rating offer, you will not have life insurance coverage. Your situation may improve and you can apply again for coverage at a later date, but keep in mind that your age still comes into play. The older you are when you apply for life insurance, the higher the cost.
There is also a chance your health worsens in addition to aging. There’s always a risk you may wind up uninsurable if the medical issue is severe enough.
What’s the best choice?
Because you never know what life may bring, we always say that buying life insurance sooner rather than later is your best bet. Your loved ones rely on your income and if you postpone purchasing life insurance and then you unexpectedly pass away, your family is left struggling.
You may be thinking “Sure, life insurance is important. But I’m healthy. I am not going to die anytime soon.”
Unfortunately, accidents happen all the time. Not to mention some life-threatening diseases such as cancer can happen even to the healthiest of people.
The website LifeHappens.org has many real-life stories of families who have been both positively affected by life insurance and negatively affected by the lack of. Take a look at Kiristen’s story about her dad who unexpectedly passed away without having life insurance in place when she was four.
If you purchase the table rated product and your health improves, you can reapply for lower premium costs, but at least in the meantime your family will have financial protection.
If you purchase and your health remains the same, you can feel relief that you made a good decision.
If you purchase and your health deteriorates, you now have guaranteed coverage during the term period and your family is protected.
Start the process of buying life insurance by getting a quote. Through Quotacy you do not need to give away any personal contact information, such as an email address or phone number, in order to see estimated life insurance prices. We believe buying life insurance should be easy, private, and understandable, so we made that our mission. Give us a try.
Note: Life insurance quotes used in this article are accurate as of September 16, 2022. These are only estimates and your life insurance costs may be higher or lower.
About the writer
Natasha Cornelius, CLU
Senior Editor and Licensed Life Insurance Expert
Natasha Cornelius, CLU, is a writer, editor, and life insurance researcher for Quotacy.com where her goal is to make life insurance more transparent and easier to understand. She has been in the life insurance industry since 2010 and has been writing about life insurance since 2014. Natasha earned her Chartered Life Underwriter designation in 2022. She is also co-host of Quotacy’s YouTube series. Connect with her on LinkedIn.