Which of the following is considered illegal discrimination in insurance applications?

The correct answer refers to refusing an applicant because of marital status being considered illegal discrimination in insurance applications. Laws in many jurisdictions prohibit discrimination based on marital status, as it is not relevant to an individual's risk profile or their ability to manage insurance policy obligations. Marital status should not be a factor in determining eligibility for coverage, as it does not directly correlate with the risk or likelihood of a claim being made.

On the other hand, refusal based on health conditions, such as being HIV positive or having diabetes, often relates to the insurance industry's necessary evaluation of risk factors. Insurers must assess an applicant's health status and history to determine the risk involved in providing coverage. Similarly, being rated as a substandard risk is a valid and recognized part of underwriting, wherein insurers can evaluate applicants based on their risk potential. Thus, evaluating these factors is within the legal and operational framework of insurance practice.