What is an impaired or substandard risk in the context of insurance?

In the context of insurance, an impaired or substandard risk refers to an applicant whose physical condition does not meet the minimum standards for normal health. This classification typically arises when the applicant has medical conditions, disabilities, or other health-related issues that could increase the likelihood of claims being filed. Insurers assess these risks carefully because they affect the expected costs associated with insuring the individual.

Insurers may charge higher premiums, impose exclusions, or even deny coverage altogether based on the assessment of the applicant's health status. Recognizing an impaired or substandard risk is crucial for insurers to accurately price policies and manage their overall risk exposure in the market.