How to Understand Life Insurance Ratings

When you contact a life insurance company to get a rate quote they must determine the risk of insuring your life. Any health problems or chronic conditions will be evaluated to help determine the amount of risk your policy has. Other lifestyle choices are also considered such as if you smoke or drink regularly; this will also increase your rates due to the increased risk of insuring your life.

• Life insurance companies use table ratings to determine the amount of money that will need to be added to your premiums in order to compensate for the risk that your current health provides them with. Table ratings are usually charted by a number or letter. The higher the number or letter, the more money you will be charged on to the regular premium for the policy that you have chosen.

• A monetary value will be assigned to each level. For example an insurance company may charge $25 per letter or number that your health determines. So if you are a table D, you would be charged an extra $100 on top of the regular premium pricing. This will help compensate them for the risk that your health adds to the policy.

• Many insurance companies use these tables to help them to be able to insure higher risk clients. Instead of turning away clients that are at a high risk of not paying enough into their policy before their death, they simply increase the rates while the policy is in effect to accumulate the most money into the policy.

• One of the benefits of these ratings is that insurance companies are able to insure those at high risk that many life insurance companies would deny a policy due to the increased risk of death. Although you may pay more for the policy, your family will be protected from the financial loss that will occur in the event of your death.

• One of the disadvantages of these table ratings is that the policy of someone who has a substantial increase in risk can often bring on a hefty monthly payment. You may not be able to afford the type of policy that you need once you add on the extra fees that this table rating has determined that you need to pay.