Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
After underwriting, an insurer offers an applicant a 'rated' (substandard) life policy with a higher premium. The applicant may:
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
When an insurer returns a rated or substandard offer, coverage issued only at a higher premium due to elevated risk, the applicant is free to accept the rated policy, decline it, or shop elsewhere. The underwriting result is the insurer's offer, not a binding obligation on the applicant. The agent should present the offer fairly and explain the rating so the applicant can make an informed decision.
Why the other options are wrong
- B) The insurer, not the applicant, sets the underwriting terms based on the risk; the applicant cannot compel a standard offer.
- C) There is no application fee to refund; the rated offer is not tied to fee refunds.
- D) Converting to a permanent policy does not bypass underwriting; the insurer still classifies the risk for the new coverage.
Memory hook
Rated offer = take it, leave it, or shop it. The applicant holds the power of acceptance.