An insurer may refuse to issue a policy to a particular insurance applicant for a reason based solely on:

The correct choice indicates that an insurer may refuse to issue a policy based on the applicant's medical condition. This is permissible because insurance companies assess risk when underwriting policies, and certain medical conditions can significantly affect the likelihood of claims being filed. Insurers are allowed to consider an individual's health status, including existing medical conditions or histories that might predict higher costs or risks for the company, as part of their underwriting process.

In contrast, choices such as race, gender, and creed are prohibited grounds for discriminating against an insurance applicant. Practices that base decisions on these characteristics violate fair treatment regulations established by laws such as the Civil Rights Act and various state-level anti-discrimination laws, which aim to ensure equal access to insurance coverage regardless of an individual's demographic characteristics. These laws recognize the importance of fairness and prohibit underwriting practices that could result in discrimination based on traits unrelated to the individual's risk profile.