Arkansas Life and Health Insurance Practice Exam

A policy issued as a preferred risk will be issued with a higher than standard rate because a preferred risk is an individual who presents a significantly lower risk of loss compared to the average risk. As a result, insurance companies typically offer preferred risks lower premiums as an incentive. Therefore, the correct answer is that a policy issued as a preferred risk will have a higher than standard rate.

In comparison, the other options are incorrect:

- Option B: Lower than standard rate is incorrect because preferred risks are offered lower premiums, not higher.

- Option C: Standard rate is incorrect because preferred risks receive rates lower than the standard.

- Option D: Variable rate is incorrect as preferred risks are usually offered a fixed lower rate, not a variable one.