How do underwriters classify risk as standard versus substandard?

How do underwriters classify risk as standard versus substandard?

• A. Based on age only.
• B. Based on health, habits, and other factors; standard is average risk; substandard is rated or rated-up with higher premiums.
• C. Determined by employer size.
• D. Standard means poor health; substandard means excellent health.

Answer: (B)

Underwriters classify risk by evaluating health status, habits, and other factors that affect the chance of a claim. When the applicant’s risk falls within the average range, the policy is issued at a standard rate. If there are health issues or lifestyle factors that raise risk, the policy is rated or rated-up, with a higher premium to reflect the greater likelihood of a claim; this is substandard. Age by itself isn’t the sole basis, and employer size doesn’t determine underwriting category for an individual. Also, standard doesn’t mean poor health, and substandard doesn’t mean excellent health.

Underwriters classify risk by evaluating health status, habits, and other factors that affect the chance of a claim. When the applicant’s risk falls within the average range, the policy is issued at a standard rate. If there are health issues or lifestyle factors that raise risk, the policy is rated or rated-up, with a higher premium to reflect the greater likelihood of a claim; this is substandard. Age by itself isn’t the sole basis, and employer size doesn’t determine underwriting category for an individual. Also, standard doesn’t mean poor health, and substandard doesn’t mean excellent health.