Sub-standard risks may be insured at increased rates due to which factor?

Sub-standard risks refer to individuals who may present a higher likelihood of experiencing a claim due to underlying health conditions or other risk factors. In this context, the health condition that is associated with an extra hazard significantly impacts the applicant's insurability. When an applicant has a health issue that poses greater than normal risks, insurers may choose to cover them but at increased rates to account for the additional risk.

Health conditions that lead to sub-standard rates can include chronic illnesses, recent surgeries, or a history of serious medical events. Insurers assess these factors to determine how likely it is that the insured will file a claim, and that assessment directly affects premium pricing. Thus, the correct choice highlights that the extra hazard associated with a health condition is a key reason why sub-standard risks may be insured at increased rates. This aligns with the practices of actuarial analysis, where risk is quantified based on individual health assessments.