Which type of disability income policy is most likely to have been issued on a substandard basis?

The most likely type of disability income policy to be issued on a substandard basis is one that is non-cancelable with a health condition exclusion rider. This conclusion stems from the nature of substandard policies, which are typically tailored for individuals who present higher risks due to existing health issues.

A non-cancelable policy guarantees the insured that their coverage cannot be canceled by the insurer as long as premiums are paid on time, which provides significant security to the policyholder. However, the presence of a health condition exclusion rider indicates that the insurer has adjusted the policy to limit their risk exposure by excluding coverage for specific pre-existing conditions. This is a common practice when underwriting individuals with health concerns, allowing them to still obtain coverage while acknowledging the increased likelihood of claims related to their condition.

In contrast, other types of policies mentioned might not be issued on a substandard basis because they either do not allow for exclusions or provide less certainty regarding the terms of cancellation. A cancelable policy, for instance, can be terminated by the insurer under certain conditions, which implies less risk for the insurer and typically does not accommodate higher risk individuals as readily. Similarly, guaranteed renewable policies without riders ensure coverage continuity without limitation, usually granted to those considered standard or preferred risks