If Andrea, a rock climber, applies for a whole life insurance policy, what may the insurer decide to do?

When evaluating an application for a whole life insurance policy, insurance companies assess the applicant's risk profile, which includes considering any high-risk activities, such as rock climbing. Since rock climbing can be deemed a high-risk activity, insurers often take steps to mitigate the associated risks when underwriting the policy.

In this context, charging an additional premium is a common practice. This higher premium reflects the increased risk that the insurer is assuming by providing coverage to someone engaged in such a hazardous sport. By adjusting the premium accordingly, the insurer can continue to offer the policy while accounting for the greater likelihood of claims related to rock climbing incidents.

While insurers might also consider other options, like declining applications or limiting coverage, these are not as commonly done as adjusting premiums. Declining an application entirely happens in cases of extreme risk or a lack of management strategies for that risk, while issuing a term rider or limiting coverage tends to be less favorable options as they do not provide the comprehensive benefits a whole life policy offers. Therefore, issuing a policy with an additional premium specifically accommodates the increased risk while maintaining the integrity of the whole life insurance coverage.