Substandard risks are defined as which of the following?

Substandard risks are defined as which of the following?

• A. Individuals in excellent health.
• B. Individuals who are at standard rates.
• C. Individuals not acceptable at standard rates because of health, bad habits or hazards.
• D. Individuals who pay premiums late.

Answer: (C)

Substandard risks refer to people whose health, habits, or hazards make them riskier than the average applicant, so they aren’t eligible for standard rates. Because of the higher risk, insurers may charge a higher premium, apply a rating (rated up), or place exclusions or other limitations on coverage. Examples include smokers, someone with a chronic health condition, or someone whose occupation or hobbies involve higher danger. The other descriptions describe either standard or better-than-standard risk, or unrelated issues like late premium payments, which aren’t about underwriting risk categories.

Substandard risks refer to people whose health, habits, or hazards make them riskier than the average applicant, so they aren’t eligible for standard rates. Because of the higher risk, insurers may charge a higher premium, apply a rating (rated up), or place exclusions or other limitations on coverage. Examples include smokers, someone with a chronic health condition, or someone whose occupation or hobbies involve higher danger. The other descriptions describe either standard or better-than-standard risk, or unrelated issues like late premium payments, which aren’t about underwriting risk categories.