What is one common action taken by insurers when an applicant is deemed a higher risk?

When an applicant is assessed as a higher risk, insurers typically take measures to protect themselves financially. One common action is to increase the premiums charged to the applicant. This reflects the higher likelihood of a claim being made based on the applicant’s risk factors, such as health conditions, lifestyle choices, or family medical history. Increasing the premium allows the insurer to mitigate the potential increased costs associated with providing coverage to a higher-risk individual.

In addition to raising premiums, insurers may also limit the coverage options available to the applicant. This could mean offering a lower coverage amount or excluding certain conditions that might lead to higher claims. These actions help the insurer manage their risk exposure while still allowing the applicant to obtain some level of insurance coverage, albeit with adjustments that account for their risk status.

The other options do not align with typical practices in the industry. Eliminating the need for medical exams would generally occur when the applicant is considered a lower risk, and offering better coverage options is contrary to the practice of adjusting terms based on perceived risk. Automatically approving applications is also uncommon for higher-risk individuals, as further scrutiny is often warranted to evaluate the potential liabilities involved.