What does the underwriting process determine?

The underwriting process is a critical component of the life insurance application journey, determining whether an individual can be insured and how they fit within a risk classification. Underwriters assess various factors such as the applicant’s age, health history, lifestyle choices, and occupation to establish if they pose a risk that the insurance company is willing to accept.

This classification is essential as it helps the insurer decide not only if they will issue the policy but also how to price it appropriately. Those deemed lower risk might qualify for lower premiums, while higher-risk individuals could face higher premiums or even a denial of coverage.

The other options focus on aspects of the insurance process that occur after underwriting. While determining the amount of premium and setting rates are closely linked to underwriting decisions, these are more about the outcomes rather than what underwriting itself determines. Terms of claim settlement also come into play after the policy is active and do not directly relate to the core function of underwriting.