General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
An underwriter states that a proposed insured presents 'a high degree of risk.' This means the insured has:
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
Saying an insured presents high risk means there is a high probability or uncertainty that a loss will occur - the chance of loss is elevated relative to standard applicants. Underwriters translate that into a risk classification and pricing. Risk describes the probability of future loss, not a past loss, a certainty, or a premium feature.
Why the other options are wrong
- B) Risk is forward-looking; a past loss is a completed fact, not risk.
- C) No loss is guaranteed; risk is a probability, however high.
- D) Premium refunds are policy features unrelated to the degree of risk.
Memory hook
High risk = high chance of loss ahead. Probability, not certainty.