Impaired Risk

Impaired risk refers to a level of risk that is above the average that an insurer has calculated internally.

How this average is measured depends on various variables that the insurer determines are material to the overall risk assessment.

Sometimes also known as substandard risk, impaired risk is usually a term used in the context of the insurance coverage itself. Not specifically on the individual or insurer.

In health and life insurance, impaired risks often affects those who has a physical condition that is below standard, or those who are in a working capacity in a hazardous job nature, and even those who have hobbies in extreme sports.

For example, someone who has a history of heart problems will be considered an impaired risk when applying to obtain coverage for health issues. So does someone who conducts sky-diving lessons trying to obtain life coverage.

Even travel insurance has different levels of coverage depending on the type of activities a traveller is intending do during his or her holidays. If you are going scuba diving for instance, a regular basic policy plan is usually not going to cover you for claims arising from injuries or hospitalization due to the diving activity.

It must be said that the higher the risk of a person, it usually just means a higher premium instead of an inability to obtain any coverage protection.

However, if the type of coverage does not involve the impairment which the insurer has identified, it is possible that a policy can still be underwritten but exceptions are included in the contract that excludes claims related to the risky impairment.

To have the best chance of getting regular coverage from insurers for regular policies, the applicant should be as honest and frank about his or her current status.

This is because analysts would already be very wary of offering coverage to those with impaired risk. A sign of dishonesty can easily convince them that it is not worth the trouble and risk to insure an individual with a high risk profession.

If one has a long health history of a specific condition, it is best to provide information on all the possible details of checkups, procedures, ongoing treatment, etc.

In some cases, insurers might require the applicant to undergo more test to ascertain the current condition.

There are actually insurance companies that specialize in underwriting substandard policies.

For example, sportsmen automatically carry a lot of potential for injuries due to the nature of their job and the manner in which they push their bodies to the limit. They therefore, understandably, have to pay a higher premium for coverage.

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