The Insurance Buying Guide: Classifying You as a Risk

Once all of the underwriting information is gathered, the underwriter will classify you as a preferred, standard or substandard risk. If you are a standard risk, you will pay the standard rate -- or premium -- for the policy. Preferred risks are entitled to premium discounts, while substandard risks may be declined, or they may have to pay an extra premium for the policy or have a policy issued with a rider omitting some element of the coverage.

To determine the risk classification, the underwriter is concerned with the following factors:

• past medical history and current physical condition;
• age and sex of the applicant;
• occupation (if still working) and avocations;
• morals; and
• pre-existing conditions.