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VALUE OF SUBSTANDARD INSURANCE

The majority of life insurance companies in North America offer insurance to substandard risks. Several important companies that formerly confined their operations to standard risks are now willing to accept substandard risks. Some companies, however, refer to insurance on people who are substandard risks as classified insurance, rather than extra-rate or substandard insurance. There is a natural reluctance to call such business "substandard insurance" since the term suggests that the insurance is lacking in some of the essential qualities of standard insurance. This, of course, is not the case.

Substandard insurance is of great social importance since it makes insurance protection available to millions of American families that would otherwise be without it. Approximately 6 percent to 7 percent of all new policies are issued on a substandard basis. Extensive investigations into the rates of mortality prevailing among various types of substandard groups are continually being undertaken, resulting in further extensions of this class of business and in revisions of the terms upon which the insurance is offered. It is perhaps fair to conclude that life insurance is now available to all except those subject to such excessive rates of mortality as to entail premiums beyond their ability or willingness to pay.

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