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We aren’t talking about kitchen tables. In your search for affordable life insurance, you may have heard of the terms “life insurance tables” or “table rating”. Or, you may have applied for life insurance, only to find out you are offered a “table rating”. You probably have no idea what this means. In this article, we discuss life insurance underwriting and the importance of understanding life insurance tables (hint: money!). Knowing the difference and knowing how the life insurance tables work can save you thousands over your lifetime.
We also discuss how to improve your health classification and table rating, if you are offered a rating. We provide examples of clients we have helped save thousands over their policy’s lifetime.
What Are Life Insurance Tables?
When you submit a life insurance application, the carrier’s underwriting department reviews your application. It also accesses information from the MIB, prescription drug history, driving records, bankruptcy history, your doctor’s records, and more.
The carrier takes all of this information and places your information in a “table”. The premiums you pay for life insurance corresponds to where you land in the table. The lower your table classification, the lower life insurance premiums you pay.
Why do they gather this information? So they can properly assess your health and assign you appropriate premiums.
There are really two parts of the life insurance tables: standard health classification + substandard risk (table rating) classification.
Generally speaking, carriers have the following standard risk classifications in their life insurance tables.
Preferred Best – you are really healthy. Great height and weight ratio, no medication, great vitals
Preferred – very healthy. Maybe a vital is off (such as moderate cholesterol), but nothing major. Maybe you are on 1 medication and the condition is stable
Standard Plus – could be moderately overweight or a family member death before age 60
Standard – this is normal, average health. Could have a moderate health condition like anxiety which is stable with medication.
Preferred Tobacco – you are pretty healthy, but otherwise smoke or use some type of nicotine alternative, like an e-cigarette.
Standard Tobacco – you have normal health, but like a preferred smoker, you smoke or use some type of nicotine alternative, like an e-cigarette.
Again, these 6 risks are sometimes known as the standard health classifications.
We now discuss the substandard life insurance tables (i.e. table ratings).
How The Substandard Life Insurance Tables Work
After this group, carriers have substandard life insurance tables for people with increased health risks. These are the “ratings” you hear about. Depending on the carrier, they are tables A through H or 1 through 16. Each alpha letter corresponds to the number. In other words, Table A = Table 1, Table B = Table 2, etc.
The most important aspect here, with substandard table ratings, is that carriers generally assess an additional 25% fee for each rating from the standard health rate (or standard tobacco if you use tobacco).
For example, Table 1 or A means the carrier assesses a 25% increase from the standard rate.
Table 2 or B means a 50% increase from the standard rate.
Table 3 or C means a 75% increase from the standard rate, And so on.
How Does Underwriting Work With Life Insurance Tables?
Underwriting and the tables go hand-in-hand. When an underwriter reviews your application for your life risk assessment, he or she places you in one of the classifications we talked about.
Here are some health and lifestyle factors that underwriters look at:
Height and Weight Combination – your BMI
Vital readings – your blood pressure and cholesterol levels, for example
Serious issues – previous diagnosis or current treatment for cancer, heart disease, diabetes for instance
Family history – yes, many health complications can be passed down, such as high blood pressure and even Huntington’s Disease
Occupation – it’s true, some occupation are riskier and therefore command a substandard rating than others
Hobbies – if you like to sew in your spare time, a life insurance underwriter isn’t going to care about that. But, if you like to rock climb, jump out of airplanes, or scuba dive greater than 100 feet, you’ll likely have a table rating
Smoking, tobacco use, or drug use – yes, these all matter. If you smoke marijuana, your rating depends on the frequency of use
So, the underwriter takes all this information in, assesses it, and then assigns you a risk classification. It could be one of the standard health classifications. Or, it could be one of the substandard table ratings.
To accurately assess your health classifications, carriers require a paramedical exam which consists of blood draw, urine sample, height/weight check among other things. Although, nowadays, many carriers are moving away from the paramedical exam and, instead, to a phone interview. Moreover, carriers will also request your doctor records if they need more information.
Life Insurance Tables Come In All Shapes And Sizes
Many life insurance carriers have tables for height and weight and to outline what characteristics are considered preferred health, standard health, etc. Take a look at the tables below.
We receive a lot of phone calls from people who are healthy, but they are a bit overweight. Well, that overweight factor will likely knock them into a table rating, even if they are healthy every other way. You can see above if Joe, who is healthy, but just “big-boned” and weighs 320 at a height of 6’0″, a carrier will likely assign a table 1 substandard rating.
You might be thinking, “Geez, John. Is there any way I can improve my life insurance table rating?”
Yes, there is. We discuss these options next.
How To Improve Your Life Insurance Health Classification Or Table Rating
Let’s do a quick review to make sure we are all on the same page. Carriers have life insurance tables to properly assess your risk. That risk is your chance of early, unexpected death. Without underwriting and the aid of these tables, the entire insurance industry could not exist. Sick people would purchase life insurance at healthy, preferred or standards rates, and then die too early. Carriers would have to pay the death benefit way too early. The carriers could not invest the premiums within a proper timeframe to create adequate financial reserves. The whole industry would go bankrupt. We would not want that to happen.
Having said that, you don’t want to pay any more than you have to. We at My Family Life Insurance are big believers in maximizing your hard earned money. (Just look at our opinion on return-of-premium life insurance or living benefits on term life insurance.) So let’s discuss how you can improve your health classification or table rating and save you some money.
Use An Independent Agency
No two carriers are alike. This goes for their underwriting and life insurance tables as well. For example, one carrier may have a preferred cholesterol ratio at 5.5. Another carrier may have it at 6.0. If you have mildly high cholesterol levels, and healthy every other way, which carrier would you choose for a preferred rating? That is right…the one who assigns a 6.0 cholesterol level.
How would you know this, though?
I don’t know, John. It would be a guess.
On your part, yes, it would. However, an independent agency knows this. It can search the 70+ life insurance carriers to see which one makes better sense in your situation. You can go on any life insurance website, throw in your basic information, and see a premium number. Unless, however, you are completely healthy, that premium number is meaningless. Most people are not completely healthy.
So, using an independent agency like My Family Life Insurance can save you money on your life insurance. We can search the landscape of the 70+ carriers to see who would be the best fit for your situation. Scroll below to read successful placements and estimated annual savings from our work.
Lose Weight Or Stop Smoking
If you are overweight, losing weight is probably the best option to improve your health classification. However, it is “easier said than done.” Trust me, I know. And, I can speak from experience. I was 50 pounds overweight at one point. My cholesterol and blood pressure were all out of whack. Once I lost the weight, these important levels returned to normal.
Losing weight takes time. And, all of the carriers generally have the same requirements towards lost weight. It goes something like this: if you lost more than 10 pounds over the last 12 months, the carrier adds back half of the lost weight to your current weight. This is your weight for the application. For example. You used to weight 300 pounds 12 months ago, but now at 200. Your new weight is 250.
Why do they do this? Because most people gain 50% or more of their weight back. Personally, I don’t think this is right. But, let’s remember the purpose of underwriting: to create a fair premium for all insureds.
Well, John, what do I do if I keep the weight off?
Good question. You can ask the carrier for premium change. They will send a medical examiner to come to your home or office to weigh you. Once the weight is confirmed, you will have a new weight. Honestly, though, depending on other factors, it could make sense to reapply altogether, especially if your vitals and health have improved.
The same goes for smoking. In other words, transitioning to a healthy lifestyle will save you money in the long run.
Take And Modify Your Policy
If you are presented with a substandard life insurance offer, it is likely in your best interest to take the offer. How is this a strategy? Simple. Let’s say you have had type 2 diabetes for a couple of years and are overweight. Well, this scenario is an expensive proposition for you. If you are committed to improving your health, and then letting time serve its course, then this could work. Underwriters like time. A longer timeframe gives them more information to assess your health. Let us explain.
If you really wanted a 30-year term policy, but have the health complications we described above, the policy is likely costly depending on other factors. If you are committed to improving your lifestyle, then why not reduce the term to 15 years and take the policy? When you lose weight and keep it off, that will improve your health. Moreover, time allows you to manage your diabetes better. Coupled with the weight loss, you could be in a good position to reapply in 2 or 3 years.
It generally makes sense to always take a substandard policy. People say they will shop around instead. You are hurting no one, but your loved ones and family, if you go that route. Typical human behavior takes over and life insurance goes on the backburner. Suddenly, something happens, and then you really need life insurance. But likely at that point, life insurance is now way too expensive. You just hurt your loved ones.
Of course, utilizing the help of an independent agency like My Family Life Insurance at the beginning of the process helps. As described earlier, we can match the carrier to your needs so you don’t have to pay any more than you have to.
Examples of Improved Health Classifications And Table Ratings
We have experience in helping people improve their health insurance tables and classification. Check out these real case studies. Names have been changed, obviously.
Carl came to us after being classified as standard health classification from another agent. All things suggested that he was more of a preferred classification. One thing stood out – a mildly high cholesterol level. However, BMI and other vitals were fantastic.
We approached several carriers who have liberal cholesterol levels and received a tentative offer for Carl for a preferred health classification. He took the paramedical exam. The results showed and supported his healthy way with low to mild cholesterol levels. The carrier granted him preferred classification. Through our help, Carl saved about $10,800 over the life of the insurance policy ($30 per month premium difference X 12 X 30 years)
Joe was diagnosed with Hepatitis B when he was 14. He came to us after being declined by another carrier. He provided us key information about his condition, all of which indicated stability. There was no cirrhosis or fibrosis of his liver, either. We reached out to several carriers. Many indicated a table 2 rating, which is not bad, but one tentatively offered standard. Not only were we able to secure life insurance for Joe, but at a standard health classification.
Mary smoked, but not a lot. Really, only a couple of cigarettes a month, if that. Honest on her application, her original carrier and agent classified her as standard tobacco. Reviewing her situation, we were able to find her standard non-tobacco classification because of her limited use of cigarettes, as confirmed through the underwriting and paramedical exam process. The savings for Mary were huge: About $50,000 saved over her 20-year term policy.
We hope now you understand how life insurance tables work. Did you recently apply for life insurance? Have you been table rated? Do you feel you need to improve your table rating or have questions about life insurance tables?
We can help. Feel free to contact us or use the form below. Our team can review your situation and identify your best course of action.
As with anything we do, we only work in your best interest only. You see, many agencies and agents opt for a recommendation that provides the highest commission for them. We can’t work like that. It doesn’t matter to us how much we make. What matters is that you have the right solution for your needs at the lowest possible premium.