What is the implication of being rated as a "substandard risk" by an insurer?

Being classified as a "substandard risk" by an insurer indicates that the individual presents a higher level of risk compared to the standard population, often due to health issues, lifestyle choices, or other factors that may increase the likelihood of a claim being made. As a result of this increased risk assessment, insurers typically charge higher premiums to compensate for the elevated chances of payout.

In this context, individuals labeled as substandard will still be eligible for coverage, but they will face greater costs associated with their policy in the form of increased premiums. The insurer adjusts the pricing to reflect the additional risk they are assuming, ensuring they can maintain financial stability while providing coverage to higher-risk individuals.

Other options do not align with the implications of being rated as substandard. For example, individuals classified as substandard are not automatically ineligible for coverage or entitled to special benefits. Similarly, the potential for receiving dividends is generally tied to policy types like participating whole life insurance and does not typically relate to the rating of an individual's risk.