General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
When underwriting reveals a condition that increases the applicant's risk, the insurer is most likely to:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
When an applicant presents above-average risk, the underwriter's usual response is to offer coverage with conditions that match the risk: a substandard (higher) premium rating, an exclusion for the specific condition, or a rider limiting coverage. This keeps the policy affordable and available while protecting the risk pool. Only the most severe risks are declined outright.
Why the other options are wrong
- B) Issuing at standard rates would underprice the increased risk and distort the risk pool.
- C) Declination is reserved for uninsurable risks; most elevated risks are offered modified coverage.
- D) Waiving medical questions would remove the very information the underwriter needs to classify the risk.
Memory hook
Higher risk, higher rating or an exclusion — not an automatic no.