Chartered Life Underwriter Practice Exam 2026 - Free CLU Practice Questions and Study Guide

An impaired risk in the context of life insurance refers to an individual whose health condition, lifestyle choices, or other factors may elevate the likelihood of premature death or health issues, thereby affecting their insurability or the terms of their coverage.

An athlete participating in extreme sports exemplifies an impaired risk, as their engagement in high-risk activities—such as skydiving, rock climbing, or motorsports—can significantly increase the likelihood of injury or fatality. Insurance companies typically assess the risks associated with such activities, which may lead to higher premiums or specific exclusions in their policies due to the elevated risk profile.

In contrast, the other individuals mentioned—such as a non-smoker in excellent health, a retiree with a clean medical history, or a young adult with no major health concerns—are generally considered standard or preferred risks, meaning they do not exhibit the factors that would significantly raise their risk factors in the eyes of insurance providers. These individuals are typically eligible for standard rates or potentially even lower premiums due to their favorable health profiles and lifestyle choices.