An applicant is seeking an insurance policy. In the underwriting process, it was determined that the applicant has some dangerous habits, a risky occupation, and poor health. Which of the following is TRUE concerning the policy premium?

An applicant is seeking an insurance policy. In the underwriting process, it was determined that the applicant has some dangerous habits, a risky occupation, and poor health. Which of the following is TRUE concerning the policy premium?



a. it will likely be higher because the applicant is a substandard risk
b. it will likely be the average premium issued to standard risks
c. the applicant's habits, occupation and health do not affect the premiums
d. it will likely be lower because the applicant is preferred risk


Answer: a. it will likely be higher because the applicant is a substandard risk

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