What does "underwriting" involve in life insurance?

Underwriting in life insurance primarily involves assessing the risk associated with an applicant to determine their insurability. This process entails evaluating various factors, such as the individual's health history, lifestyle choices, age, and other relevant information. By analyzing this risk, insurers can decide whether to accept the application and, if accepted, at what premium rate the insurance coverage will be offered.

When underwriters evaluate an application, they aim to predict future claims based on the applicant's risk profile. This assessment helps insurers maintain a viable business model by ensuring that they collect sufficient premiums relative to the expected number of claims.

In contrast, collecting premiums relates to the administrative side of managing insurance policies, reviewing claims pertains to the evaluation of events after they occur, and marketing involves promoting the insurance products to prospective customers. While these activities are essential for the functioning of an insurance company, they are distinct from the core function of underwriting, which is focused on risk assessment and management.