Substandard health insurance is health coverage for policyholders who have a serious illness, medical condition, past medical history, or an unhealthy background and whose mental and physical condition result in the insurer rating them below standard due to the higher risk they represent. Therefore, these policyholders typically pay a higher premium than their healthier counterparts and may face some restrictions in coverage.
Insurers look into the medical condition and past medical history of applicants to determine their overall health and classify their risk as standard or substandard, among others. Applicants with a higher or substandard risk increase the likelihood that the insurer would incur losses due to more or larger claim amounts; therefore, substandard health insurance often includes special provisions or higher premiums to mitigate the higher risk the insurer takes on.
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