An applicant's health history places the applicant between standard and substandard health categories, so the insurer issues the policy with a table rating that adds an extra premium. The rated policy means the applicant:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A table rating (or rated policy) is an underwriting outcome in which coverage is issued to an applicant whose risk is greater than standard but still insurable, and the premium is increased above the standard rate to reflect the additional mortality risk. The rating may take the form of an extra premium, a flat additional amount per $1,000, or a higher age rating. The policyowner pays the higher premium in exchange for full coverage; alternatively, some arrangements reduce benefits for the standard premium. A table rating keeps the applicant insured while properly pricing the risk.
Why the other options are wrong
- B) A rating raises the premium above the standard rate. It never results in a lower premium for the insured, because the rating reflects higher than standard risk.
- C) A reduced benefit for the standard premium is one possible design. The table rating described in the question charges an extra premium while keeping the full face amount.
- D) A rated policy does not require a single lump-sum payment. Premiums under a rated policy follow the policy’s normal payment mode, such as annual or monthly.
Memory hook
Table rating = standard coverage, extra-cost ticket. Higher risk, higher premium, still fully insured.