What is the primary purpose of underwriting in life insurance?

The primary purpose of underwriting in life insurance is to assess the risk of the applicant. Underwriting involves evaluating various factors related to the applicant's health, lifestyle, occupation, and medical history to determine the likelihood of a claim being made. This risk assessment helps insurance companies establish the terms of coverage and the premium rates that reflect the level of risk associated with insuring that individual. It ensures that the insurer can maintain a balanced portfolio of policyholders, where the premium income adequately covers any potential claims.

In contrast, while marketing strategies, policy pricing, and terms are important components of the insurance process, they are not the main objective of underwriting. Marketing strategy focuses on how to attract potential customers, pricing is determined after the assessment of risk, and policy creation involves drafting the specific details of coverage, all of which are influenced by the underwriting process rather than being its primary purpose.