What will likely happen to the policy premium if the applicant has dangerous habits, a risky occupation, and poor health?

The correct answer indicates that the policy premium is likely to be higher because the applicant is considered a substandard risk. This assessment is based on the understanding that insurance companies evaluate applicants based on several risk factors, and in this scenario, the applicant's dangerous habits, risky occupation, and poor health all contribute to an increased likelihood of claims.

When an applicant engages in dangerous activities or works in a hazardous profession, they present a higher risk to the insurer. Similarly, poor health can lead to more frequent and costlier claims. Insurers use these factors when determining premiums; a higher risk usually translates to a higher premium to cover the greater potential for loss. Thus, the insurer's need to mitigate risk means that such applicants are frequently categorized as substandard risks, resulting in higher premiums compared to standard or preferred risks.

Understanding these dynamics is essential for anyone preparing for a career in life insurance, as it highlights how crucial risk assessment is in determining policy costs.