Which term describes a person not acceptable at standard rates because of health history, occupation, or hobbies?

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

Answer: (D)

In underwriting, applicants are placed into risk categories based on health history, occupation, and hobbies. Substandard risk is the category used for someone whose health or activities mark them as higher mortality risk, so they can’t be priced at standard rates. They’re still insurable, but at a higher premium or with rating classifications (and sometimes with exclusions or limited coverage). That’s why this choice best describes someone not acceptable at standard rates due to health history, occupation, or hobbies. Standard risk would qualify for standard rates, and preferred risk is a better-than-average category with lower premiums. High risk isn’t the formal label used here for standard-rate unacceptability.