What characterizes a substandard risk?

A substandard risk is characterized by individuals who may present higher risks to an insurance company due to personal health conditions or lifestyle choices. These individuals typically have health issues that can affect their life expectancy or overall risk profile, such as chronic illnesses, a history of serious medical conditions, or dangerous habits.

In these cases, insurance companies may assess that the likelihood of a claim being filed is higher than average. As a result, they often charge higher premiums to account for the increased risk associated with insuring these individuals. This adjustment in premium reflects the additional risk taken on by the insurer.

The other options describe scenarios that do not align with the definition of substandard risks. Options highlighting individuals with no health concerns, superior health conditions, or those eligible for standard rates indicate lower risk profiles for insurers, contrasting with the characteristics of substandard risks.