Substandard Life Insurance

Updated: 09 June 2023

What Does Substandard Life Insurance Mean?

Substandard life insurance refers to a type of life insurance issued to individuals considered uninsurable at standard rates due to their below standard physical condition; medical history of serious illness, such as heart disease; or other similar factors. As an extra-risk policy, it requires policyholders to pay a higher premium than for standard policies.

Insuranceopedia Explains Substandard Life Insurance

In the past, many life insurance applications would not be acceptable due the high risk of insuring the individual in question. Improvements in underwriting processes have enabled insurance companies to create classifications of risks into standard, preferred, substandard and uninsurable. Therefore, applicants considered a substandard risk, i.e., an individual deemed uninsurable due to their health condition, dangerous habits, family history of disease, hazardous work or hobbies, and other similar factors, may qualify for a substandard life insurance policy. However, due to the high risk, it may only offer partial benefits at a higher premium or overall cost.

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