Rhode Island Life Insurance Practice Exam

What is an underwriting process in life insurance?

1. The examination of claims made by beneficiaries

2. The assessment of risk to determine insurability

3. The process of marketing insurance policies

4. The evaluation of policy documents for disclosures

The correct answer is: The assessment of risk to determine insurability

The underwriting process in life insurance refers to the assessment of risk to determine insurability. This is a fundamental function of insurance that involves evaluating various factors related to the applicant, including their health history, lifestyle choices, and other relevant information that could affect their life expectancy and the insurer's overall risk. By analyzing these factors, underwriters can make informed decisions about whether to accept or decline a policy application, as well as determine the appropriate premium rates. This ensures that the insurance company can effectively manage its risk while providing coverage to those who qualify. The other choices do not encapsulate the essence of underwriting. Examining claims pertains to the claims handling process after a policy is in force, marketing involves promoting policies to potential clients, and evaluating policy documents for disclosures is related to regulatory compliance rather than the assessment of risk associated with potential policyholders.