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Simple English definitions for legal terms
classified risk
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A quick definition of classified risk:
Classified risk refers to the possibility of harm or loss that is categorized based on specific factors such as a person's health or other perils. It is a type of risk that is considered by insurance companies when determining coverage and premiums. For example, someone with a history of health issues may be classified as a higher risk for health insurance. Insurance companies may also consider non-insurable risks, which are risks that are too uncertain to be covered by insurance.
A more thorough explanation:
Definition: Classified risk refers to the risk associated with a policyholder's substandard health or other peril in life and health insurance policies.
Examples:
- A person who has a pre-existing medical condition, such as diabetes or heart disease, is considered a classified risk for health insurance.
- Someone who works in a hazardous occupation, such as a firefighter or construction worker, may be classified as a risk for life insurance.
These examples illustrate how a policyholder's health or occupation can increase the likelihood of a claim being made on an insurance policy, which in turn increases the risk for the insurer.