Guides
Table ratings and flat extras explained
How insurers surcharge higher-risk applicants: table ratings that raise the premium in steps, flat extras that add a fixed charge per $1,000, and duration.
Table ratings and flat extras are surcharges an insurer adds when it will cover you but sees more risk than its standard price assumes. A table rating raises the premium by a percentage, set in steps, because your health condition increases the chance of dying throughout the policy. A flat extra adds a fixed dollar amount per $1,000 of coverage, usually for a specific hazard, and often for a limited number of years. Either one means the coverage is real, with a higher price.
Both appear on offers for people in the substandard range, sometimes called "rated" policies. Insurers differ on when they use them.
Table ratings
A table rating (also called a table or a "substandard table") is a percentage markup on the standard premium for your age. The tables are named by letters or numbers. The most common convention steps up in increments of 25 percentage points of extra mortality:
| Table | Extra mortality assumed | Rough premium effect |
|---|---|---|
| Table 1 (A) | 125% of standard | About 25% more |
| Table 2 (B) | 150% | About 50% more |
| Table 3 (C) | 175% | About 75% more |
| Table 4 (D) | 200% | About double |
| Table 8 (H) | 300% | About triple |
Not every insurer uses every table or the same labels. Some use letters, some use numbers, and some offer fewer tiers, and the highest table they will offer differs. The premium effect is approximate because the surcharge applies to the mortality portion of the price, and policy fees and other loadings are handled differently from company to company. Your offer will state the actual premium, so compare dollars rather than table letters.
Table ratings usually remain for the full policy term, although some insurers will review after a period of stable health.
Flat extras
A flat extra is a charge expressed per $1,000 of death benefit per year, for example "$5 per $1,000 for five years" (a hypothetical). It is added to the premium on top of the rate class. It is typically used when the extra risk is:
- Temporary or time-limited, such as a recent surgery, a condition expected to resolve, or a period of hazardous activity.
- Tied to an activity or occupation, such as flying a private aircraft, scuba diving at depth, mountain climbing or racing (see scuba, skydiving, climbing and life insurance and life insurance for high-risk jobs).
- Not proportional to age: the added risk is the same for a 30-year-old as for a 55-year-old, so a flat dollar charge fits better than a percentage.
Flat extras are often temporary. A common arrangement is that the extra charge lasts a set number of years and then drops off, or can be removed if the hazard ends, such as when you stop the hobby or leave the occupation. Ask whether your offer has a removal option and what proof is needed.
Table rating or flat extra: which is used when
| Situation | Often handled by |
|---|---|
| Chronic health condition with long-term risk (certain heart, diabetes, weight-related conditions) | Table rating, or a lower rate class |
| Hazardous hobby or travel, or an avocation | Flat extra, or sometimes an exclusion |
| Dangerous occupation | Flat extra, or a higher class |
| Recent but resolved health event | Postponement, or a temporary flat extra |
| Combination | Both, a table rating and a flat extra |
Insurers also use other tools: declining a particular rider, limiting the amount or adding a policy exclusion for a narrow cause of death (aviation, for example). Exclusions leave the price alone but restrict coverage, so read the policy carefully (see what life insurance doesn't cover: exclusions to know).
A hypothetical example
Say a 45-year-old applies for $500,000 of term and the insurer's standard price is $50 a month. The underwriter finds a condition that justifies Table 2, which would raise the cost by about half, to roughly $75 a month. If the same applicant also flew a small plane, the insurer might add a flat extra of a few dollars per $1,000 a year, which on $500,000 would add several hundred dollars a year. These numbers are invented to show the math, not market prices.
What to do when you get a rated offer
- Ask what caused the rating. The agent can get the reason from the underwriter, and it may be one lab value or a single record.
- Ask whether the rating is reviewable. Some insurers will reconsider after a stated period of improved health. See asking for a better rate class later.
- Compare other insurers. One company's table 3 may be another's standard. Guidelines differ widely for conditions such as controlled diabetes or sleep apnea.
- Compare the cost with the need. A rated policy may still be far cheaper than going without coverage, and a smaller amount may fit your budget.
- Consider what happens at the end. Does the rating apply to riders? Is the rating permanent? Does it apply to the conversion option on a term policy?
- Do not decline the offer before checking the alternatives, but also do not accept without looking at the coverage details: the contract can include a lower death benefit in early years in graded products (see graded death benefits: why the first two years matter), which is a different thing from a rated standard policy.
If the insurer based its decision on a consumer report such as the MIB or a prescription history, you should receive a notice and have the right to a free copy of the report (see The MIB report: what insurers know about your history and how insurers check your prescription history).
Key takeaways
- A table rating is a percentage surcharge in steps, generally for long-term health risks, and usually stays for the life of the policy.
- A flat extra is a fixed charge per $1,000 of coverage, commonly for hazards such as aviation or occupation, and is often temporary.
- Labels and tables differ by insurer, so compare the dollar premium rather than the table letter.
- A rated offer is still a full-coverage policy; ask what drove the rating and whether it can be reviewed.
- Shopping several insurers can change the result, since underwriting guidelines vary.