Guide To Life Insurance Table Ratings
By James Tobin, CFP®
Expert Review - Guide To Life Insurance Table Ratings
When you were told that because of a health condition or a lifestyle choice that your life insurance application will be table rated, you may have wondered "what the hell is a life insurance table rating"?
"Table Ratings' are the method by which life insurance carriers assign additional premium to risks that they are willing to insure, but at a higher rate than their regular rates.
The purpose of this article is to provide the information you need to navigate through life insurance table ratings and help you avoid them, if possible.
If you know what information you are looking for, simply use the quick navigation tool to jump to the area in which you're interested.
What is a life Insurance Table Rating ?
Life insurance table ratings can be reflected as letters or numbers, so Table A and Table 1 are the same.
Thus, Table B and Table 2 are the same, and so on. Some companies use numbers and others use letters.
Each table rating adds approximately 25% to the "standard" rate. Table ratings run up to a Table 16 = 400%.
A few carriers do not have standardized tables....
In these cases, life insurance table ratings vary, lower table ratings are closer to 25%, higher ratings are closer to 50%, and may vary by the sex of the applicant.
Why You Should Use an Independent Agent when dealing with Life Insurance Table Ratings
If you have read anything else on this site or spoken to an independent agent, you know how much your individual story matters to underwriting.
This is particularly true when dealing with a potentially table rated case. Because as the costs are higher, the potential savings by doing it right, are higher also.
This is the point where I start singing the praises of using an independent agent, and backing up that advice with proof!
How To Avoid A Life Insurance Table Rating
(or at least get the lowest one possible)
Now you already understand that your story matters, what you might not know is that different insurance companies will also treat each case differently.
So, if your Agent only represented one carrier and you found out later that that you could have gotten a rate 50% (2 tables) better, how would you feel?
You'd probably be mad either at the agent or yourself or both. So it's important that your Agent represent multiple carriers.
A good independent agent will have access to over 50 carriers. This ensures the best chance at a good rate.
This is particularly true in the case of table ratings because some carrier, but not all, have Table Shave" programs that can improve your rating by up to 4 tables.
What are Table Shaving programs?
Table shave programs are essentially marketing tools for life insurance carriers to sell insurance , particularly permanent insurance.
The way this works is a company will upgrade a table rating to standard, based on healthy behavior, if the policy being purchased is a permanent product.
This is useful if you are in the market for permanent insurance obviously, However, it also can be useful if the table rated term policy winds up costing as much as the the permanent.
In that case , you choose the permanent option and get a better policy for the same cost.
There are a few carriers that have table shave programs available for term products. This is simply a case of them "buying the business" in a competitive market.
Case Study : Life insurance with a Table Rating
Please see the case study below, it will show why it is in your interest to have as many options as possible available when shopping for life insurance with a table rated health impairment.
Female Age 46
$250000 20 Year Term
Rheumatoid Arthritis (less than 3 years) NAISD & occasional prednisone use
This looks like a best case scenario would be Table 2/B depending on the insurers appetite for a RA risk. Let's take a look at the rates.
- TABLE 2/B
- Table 4/D
Life Insurance Company
Life Insurance Company
Life Insurance Company
This table which shows only a few of the major life insurance companies available illustrates the difference in rates. For standard rates Lincoln is almost 50% less expensive than Pru.
On its face this seems like a pretty straightforward choice and if underwriting grades between carriers is the same, it really can be that simple. This kind of easy price shopping is particularly useful for younger folks in good health and demonstrates why you want to use an independent Agent.
As it turns out the obvious choice wasn't the right one. it is likely the best choice in this situation will be either Banner or AIG because the case will likely be seen as Table 2.
* You may have noticed the difference in standard and Table 2 for Banner does not follow the model described earlier. this is because Banner prices table rating off standard plus ratings not standard.
Because life insurers manage their appetite for specific risks by being more lenient or more stringent with underwriting grades, you need to know which company will grade you a standard risk and which ones will grade you as a table rated risk.
Your Next Step
Now that you know the information you will need to receive the most accurate quote possible, it's time to gather the information and speak to an independent Agent (raising my hand).
We are committed to totally transparent pricing (we'll even share our computer screen with you if you'd like), and making the application process as painless as possible.