Which of the following describes someone who is not acceptable at standard rates due to health history or lifestyle?

• A. Substandard risk
• B. Standard risk
• C. High risk
• D. Preferred risk

Answer: (A)

In life insurance underwriting, applicants are placed into risk classes based on how likely they are to die earlier than average. When health history or lifestyle makes someone riskier than the average person, they don’t qualify for standard rates. That category is called substandard risk. Being substandard means the insurer will charge a higher premium or use a rated table to reflect the increased risk, and coverage may be offered with limitations.

Standard risk describes average health and lifestyle that qualify for regular pricing. Preferred risk is even better than standard, with lower premiums for healthier individuals. The term high risk isn’t the typical rating used in most exams and would imply an even more extreme situation or potential denial of coverage, which is not the standard label for someone just above standard but not necessarily uninsurable.