How much insurance coverage does a substandard risk have if they pay the same premium as a normal risk with a $20,000 coverage?

In the context of insurance underwriting, a substandard risk is classified as an individual whose health or lifestyle presents a greater risk for the insurer than that of a standard risk. When a substandard risk pays the same premium as a standard risk for coverage, they typically receive a reduced coverage amount due to the higher risk associated with their health status.

In this scenario, if a substandard risk pays the same premium as a normal risk that is typically linked to $20,000 of coverage, it's understood that the insurer adjusts the total coverage downward to mitigate potential losses from the higher risk. Hence, a coverage amount of $15,000 is a logical figure, reflecting a standard reduction for someone categorized as a substandard risk while still maintaining the same premium level.

This interpretation aligns with common practices in underwriting, where insurers often issue lower coverage amounts to substandard risks as a compensatory measure against the increased likelihood of claims. The critical point is that the premium does not dictate the coverage level for a substandard risk, which inherently adjusts to account for the perceived risk.