What can result from being categorized as a substandard risk by an insurance company?

Being categorized as a substandard risk by an insurance company typically means that the individual represents a higher risk for the insurer due to factors such as health status, lifestyle choices, or family medical history. As a result, the insurance company will often increase premium costs to account for this elevated risk level. This adjustment in pricing is a way for the insurer to mitigate potential financial losses that could arise from insuring a higher-risk individual.

In contrast to the correct answer, lower deductibles, reduced premium rates, and immediate acceptance without conditions do not apply in this scenario. Generally, individuals categorized as substandard risks may not benefit from lower deductibles or reduced rates; instead, they often experience higher deductibles and premiums. Immediate acceptance without conditions is also unlikely, as insurers typically impose specific criteria and conditions on substandard risks to manage their exposure effectively. Thus, increased premium costs accurately reflect the financial adjustments necessary for insuring individuals classified as substandard risks.