Which of the following statements about the classification of applicants is incorrect?

The classification of applicants is an essential concept in health insurance underwriting, determining the premiums based on the perceived risk associated with each applicant. The classification categories include preferred, standard, and substandard applicants.

Preferred applicants represent those who exhibit a lower risk of health issues, which typically leads to them qualifying for lower premiums. They usually have a clean medical history and fewer health complications, making them an attractive choice for insurers.

Standard applicants, on the other hand, are viewed as average risks. Their health profiles indicate a normal likelihood of needing medical care, which means they will pay average premiums reflective of this risk category.

Substandard applicants, often classified due to existing health issues or risk factors, might incur higher premiums, but they aren't guaranteed acceptance. It's important to note that underwriters have the discretion to decline coverage for these higher-risk applicants if they determine the risk is too significant.

Therefore, the statement about substandard applicants being never declined by underwriters is incorrect because insurers can indeed choose to decline coverage based on the evaluation of risk presented by substandard applicants. Understanding these classifications helps clarify the decision-making process insurance companies apply when evaluating applicants.