Life & Health Insurance Exam (National Portion)Underwriting and Policy IssueMedium
A life insurance applicant is 35 years old, has no significant health issues, works a sedentary office job, and does not smoke. Based on this information, which risk classification is the underwriter most likely to assign?
- ASubstandard Risk
- BPreferred Risk
- CStandard Risk
- DDeclined Risk
Show answer & explanationAnswer & explanation
Correct answer: C. Standard Risk
A person with no significant health issues, a sedentary job, and who doesn't smoke generally fits the criteria for a Standard Risk. This classification applies to individuals who meet the insurer's average health and lifestyle standards.
Why the other options are wrong
- A. Substandard risk is for higher-than-average risks, which doesn't apply here.
- B. Preferred risk typically requires excellent health, ideal weight, and often a better-than-average family health history; 'no significant health issues' doesn't automatically mean 'excellent'.
- D. Declined risk is for uninsurable applicants, which is not the case here.
Standard Risk
An insurance applicant who meets the insurer's average criteria for health, occupation, and lifestyle, qualifying them for standard premiums.
- Average health and lifestyle
- Qualifies for standard premiums
- Most common risk classification
Memory trick: Risk Class: P.S.S.D. - Preferred, Standard, Substandard, Declined. Average is STANDARD.