Which of the following types of insureds are life insurance companies allowed to make policy rate discriminations against?

Life insurance companies often have the ability to adjust policy rates based on various factors that assess the risk associated with insuring an individual. One key category where such discrimination is permissible involves lifestyle choices, particularly smoking. Smokers tend to face higher health risks and associated costs, which can translate into higher premiums for life insurance policies. This practice is grounded in statistical data demonstrating that smokers generally have shorter life expectancies compared to non-smokers, prompting insurers to mitigate risk through differentiated pricing.

In contrast, while pre-existing conditions may affect underwriting and premiums, insurance companies are subject to legal restrictions that limit the extent to which they can discriminate based on these health-related issues. Similarly, young adults and individuals with low credit scores may also experience different underwriting criteria or rates, but regulations often protect these groups from overt discrimination that could be considered unfair or unjustified. Thus, the differentiation made against smokers is consistent with industry standards and reflects the underwriting principles used by insurance companies to balance risk and ensure financial sustainability.