Ace the Chartered Life Underwriter Challenge 2025 – Secure Your Success and Dominate the Exam!

An "impaired risk" in life insurance underwriting refers to individuals who present an increased risk to the insurer due to specific health conditions or hazardous lifestyles that could shorten their life expectancy. This classification can arise from various factors, such as chronic illnesses, serious medical histories, or engaging in dangerous activities. Insurers take these risks into account when assessing an applicant's eligibility for coverage and determining premium rates. Understanding the concept of impaired risk is crucial for underwriters and agents because it highlights how health conditions can significantly influence the terms and availability of life insurance policies.

The other options do not accurately reflect the definition of impaired risk. For instance, wealthy individuals (the first option) or those in good overall health (the second option) typically fall into lower risk categories, while those seeking term policies only (the fourth option) do not inherently imply increased risk—they may be perfectly healthy or have other risk profiles unrelated to policy duration.