Pennsylvania Life and Health Insurance Exam Practice Question
Which category of risk will provide an individual with the lowest premiums?
Correct Answer: D
Rationale: Individuals classified under the preferred risk category typically present the lowest premiums due to their favorable health, lifestyle, and financial stability. This classification indicates a lower likelihood of claims, prompting insurers to offer better rates.
In contrast, standard risk individuals have average health and lifestyle factors, resulting in moderate premiums. Rated risks, often associated with higher health risks or adverse factors, incur higher premiums due to increased claim likelihood. Market risk pertains to investment environments rather than personal insurance, making it irrelevant in this context. Thus, preferred risk offers the most advantageous premium structure.
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