If a group of substandard risks is to be fairly treated, the degree of extra mortality represented by the group and the approximate period in life when the extra mortality is likely to occur must both be known within reasonable limits. It makes a great deal of difference financially whether the extra claims are expected to occur primarily in early life, middle age, old age, or at a level rate throughout the individuals� lifetimes. If the extra mortality occurs during the early years of the policies when the amount at risk is relatively large, the burden on the company will be greater than if it occurs later when the amount at risk is relatively small. Hence, between two substandard groups representing the same aggregate amount of extra mortality, the group whose extra mortality is concentrated later in life should pay a smaller extra premium than the group whose extra mortality occurs earlier.

There are innumerable variations in the distribution of the extra risk among different classes of substandard risks. It is impractical, however, for companies to recognize all the many patterns of risk distribution. The majority of companies therefore proceed on the assumption that each substandard risk falls into one of three broad groups. In the first group, the additional hazard increases with age; in the second group, it remains approximately constant at all ages; in the third, it decreases with age.

Examples of each type of hazard are easy to find. High blood pressure presents an increasing hazard. Occupational hazards represent a constant hazard, as do certain types of physical defects. (Even though most constant hazards tend to increase somewhat with age, they are treated as if they remain constant.) Impairments attributable to past illnesses and surgical operations are hazards that decrease with time, although not all illnesses and operations fall into this category.