Which group represents the majority of life insurance applicants?

The choice indicating that standard risks represent the majority of life insurance applicants is based on the fact that most individuals seeking life insurance fall within this category. Standard risks are typically those who are generally healthy and have average risk factors, thereby qualifying for coverage at standard premium rates.

These individuals usually have no significant health issues or lifestyle choices that would lead to them being classified as substandard risks, which are individuals considered to be at a higher risk for insurance purposes. As a result, their premiums would usually be higher due to their increased risk of claim. On the other hand, preferred risks are individuals who are even healthier than standard risks and can qualify for lower premiums due to their favorable health profile. However, they represent a smaller segment of applicants compared to the larger group classified as standard risks.

High-net-worth individuals do seek life insurance, but their insurance needs often differ. They tend to focus on policies that provide wealth transfer and estate planning features instead of regular life insurance to cover standard risk scenarios. This makes them a minority compared to the larger pool of applicants who fall into the standard risk category, reinforcing that standard risks hold the majority as life insurance applicants.