What plan allows for coverage of substandard risks while maintaining a standard premium?

The lien system is designed to address the challenges associated with insuring individuals who present substandard risks while maintaining coverage through a standard premium. In this system, the insurer provides coverage but may impose a lien against the policy, which means that any claims made may be paid out only after certain conditions are met, usually related to the risk factors that have been identified in the applicant.

This approach allows insurers to extend coverage to those who might otherwise be denied due to pre-existing conditions or other risk factors while still charging a standard premium. By using a lien, the insurance company can manage their risk more effectively, ensuring that they are not unduly exposed to high claims from these higher-risk individuals.

In contrast, other options do not effectively fulfill this dual requirement of covering substandard risks while keeping premiums at standard rates. For instance, exclusion plans typically involve excluding certain high-risk conditions or activities from coverage, leading to a lack of comprehensive protection for the insured. Default plans are typically related to non-payment of premiums or other failures in policy obligations. Waiver systems usually involve certain conditions or benefits being waived rather than a mechanism for managing substandard risks and premiums effectively.

Thus, the lien system represents a balanced solution that allows for inclusion of higher-risk individuals in the insurance