A disability income insurance policy was recently issued with a rating. What does this mean?

When a disability income insurance policy is issued with a rating, it signifies that the underwriting assessed the applicant as presenting a higher risk than preferred applicants. This elevated risk can stem from factors such as pre-existing health conditions or lifestyle choices that could lead to increased likelihood of disability.

In response to this higher risk, the insurer assigns a rating to the policy which typically results in the policyholder being charged an additional premium. This adjustment reflects the insurer's need to compensate for the increased likelihood of paying out benefits. It is a common practice in underwriting to ensure that those presenting more risk contribute more financially to the insurance pool.

The options that indicate a complete denial of coverage, lowered benefits, or reduced coverage duration are not accurate in this context. The policy is still issued; it is merely subject to a higher premium due to the rating, indicating that the coverage remains intact, but the cost to the policyholder is increased reflecting the perceived risk.