What is "substandard risk" in insurance?

In insurance terminology, "substandard risk" refers to a classification assigned to applicants who present a higher level of risk for the insurer due to certain factors that may include health conditions, lifestyle choices, or other relevant criteria. This classification indicates that the individual is more likely to incur claims compared to the average applicant.

Such factors might include chronic health issues, engaging in high-risk activities (like extreme sports), or a history of risky behavior, which all elevate the potential for future claims. Insurers assess these risks to determine the appropriate premium rates to charge, ensuring that the coverage still remains financially viable for the company.

The other classifications mentioned do not correctly describe substandard risk; classifications for low-risk applicants, those with outstanding credit, or age-specific designations address different aspects of insurance evaluation and underwriting processes.