Flat Extra Premium
A specific dollar charge per unit of coverage added to standard premium for a temporary or occupational hazard (aviation, hazardous sports), removable when the hazard ends.
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Practice This Concept
An applicant is classified as a substandard risk. The insurer will typically:
Charge a higher premium or add a flat extra premium to reflect the increased risk of loss — Substandard risks, also called rated or impaired risks, present a higher than average chance of loss because of health history, occupation, or avocations. Insurers either increase the premium, using a rated-up age or a flat extra premium per thousand, or limit coverage to reflect the added mortality risk. The higher premium compensates the pool for the additional risk so that standard-risk policyowners do not subsidize impaired lives. A decline or postponement is used when the risk is too great to insure.
National insurance concept
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