Legal Definitions - classified risk

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.