Ace the Chartered Life Underwriter Challenge 2026 – Secure Your Success and Dominate the Exam!

Question: 1 / 400

Which of the following describes a person who is NOT acceptable by an insurer at standard rates because of health history, occupation, or hobbies?

Preferred risk

Standard risk

Substandard risk

A person who is categorized as a substandard risk is one whose health history, occupation, or hobbies pose a higher risk to the insurer compared to the average individual. This designation typically occurs when an individual's circumstances increase the likelihood of claims due to factors such as past medical conditions, hazardous jobs, or dangerous hobbies.

In the insurance industry, standard rates are designated for individuals deemed normal risk based on health and lifestyle factors. Those falling under substandard risk, however, will not qualify for these standard rates and may instead be offered coverage at higher premiums to reflect the increased risk to the insurer. This classification helps the insurer to balance the potential risk of loss against the premium income, allowing them to manage their overall risk exposure effectively.

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Low-risk individual

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