What does the term "impaired insurance risk" refer to?

The term "impaired insurance risk" specifically refers to individuals who are likely to generate higher claims due to certain pre-existing conditions or health issues. These individuals often present a greater risk to insurers because their health challenges can lead to more frequent or costly medical claims.

For example, someone with a chronic illness or a significant medical history is categorized as an impaired risk, prompting insurance companies to charge higher premiums or impose certain restrictions on their policies. Insurers assess these risks to ensure that they can balance their exposure to loss while still providing coverage.

The other options do not accurately represent the definition of an impaired insurance risk. A low probability of claims occurring defines a standard risk, while high premiums might reflect risk but do not inherently define what makes someone an impaired risk. Lastly, a person with excellent health records would typically be considered a standard or preferred risk, not impaired.