Which term describes a risk category where a person is charged higher premiums due to health history?

• A. Standard Risk
• B. Preferred Risk
• C. Substandard Risk
• D. Declined Risk

Answer: (C)

Underwriting classifies applicants by how much risk they pose, which directly affects premiums. When health history shows conditions that raise the chance of a claim, the applicant is labeled substandard risk. That designation means higher premiums are charged to reflect the increased risk, and policy terms may include restrictions or riders. This is why substandard risk is the correct term for "charged higher premiums due to health history." By comparison, standard risk reflects average health with standard pricing, preferred risk is better-than-average health with lower premiums, and declined risk means no coverage is offered.