Chartered Life Underwriter Exam 2025 – 400 Free Practice Questions to Pass the Exam

In the context of life insurance underwriting, risk classification is critical for determining the premiums associated with a policy. A person who is a nonsmoker, of average weight, and in excellent health typically meets the criteria for a preferred risk classification.

This classification is reserved for individuals who present a lower risk to insurers due to their favorable health and lifestyle choices. Preferred risk individuals usually possess healthier biomarkers (such as blood pressure and cholesterol levels), do not engage in high-risk activities, and overall demonstrate responsible health habits. As a result, insurers often offer them lower premiums as they are less likely to make claims compared to standard risk individuals.

The other classifications do not align with the characteristics of the individual described. Substandard risk refers to those with health issues or risky behaviors that pose a higher likelihood of claims. The normal risk classification typically encompasses individuals who are not exceptional but also do not present any significant health concerns, often leading to average premiums, which contrasts with the lower rates offered to preferred risks. Lastly, the high-risk category includes individuals who present considerable challenges to insurers, such as severe health conditions or hazardous lifestyles, clearly not fitting the profile of a healthy, nonsmoking individual in this scenario.