Morbidity Risk
The risk of loss from sickness or injury, measured by morbidity tables and priced into A&H premiums - the health-insurance analogue of mortality risk.
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An insurer issues a disability income policy to an applicant who has controlled high blood pressure but charges a higher premium than the standard rate. This outcome is known as:
Substandard (rated) acceptance, reflecting an increased risk of loss — When underwriting identifies a risk factor, such as high blood pressure, that raises the probability of a disability claim but does not make the applicant uninsurable, the insurer typically accepts the applicant on a substandard or rated basis. A rating means the premium is increased, the benefit amount is reduced, or both, so that the price reflects the elevated morbidity risk. This is a routine underwriting outcome for applicants with treatable or controlled health conditions, and it allows coverage to be offered rather than denied. The insurer has determined the risk is insurable, just at a higher cost.
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How does the applicant's age typically affect the premium for a disability income policy?
Older applicants pay higher premiums because the probability of disability rises with age — Age is a core rating factor in disability income underwriting because morbidity risk increases with age: older insureds are more likely to become disabled and, once disabled, tend to remain disabled longer. An applicant applying at age 50 pays a higher premium than the same applicant at age 35, all else equal, because the expected claim cost is higher. Age also interacts with the benefit period; the cost of a benefit period running to age 65 rises for older applicants because fewer working years remain and full-period benefits become relatively more expensive.
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