What term refers to the rate at which an insurance company charges premiums based on specific characteristics?

The term that refers to the rate at which an insurance company charges premiums based on specific characteristics is known as risk classification. This process involves categorizing applicants into various groups based on factors such as age, health, occupation, and other relevant characteristics that may affect the likelihood of a claim. By analyzing the risk associated with each category, insurers can set premium rates that accurately reflect the level of risk involved. Essentially, risk classification allows insurance companies to tailor premium amounts to individuals or groups, ensuring that those who present a higher risk pay a higher premium, while those who are considered lower risk are charged less. This fundamental principle helps maintain the financial stability of insurance companies and ensures fairness in premium pricing.