Question

What are the two primary purposes of underwriting in the context of life insurance?

a.

To assess the risk and determine the premium

b.

To prevent anti-selection and promote fair insurance practices

c.

To maximize insurer profits and minimize policyholder benefits

d.

To advertise insurance products and attract more customers

Posted under IC38 Life Insurance Agent Exam

Answer: (b).To prevent anti-selection and promote fair insurance practices Explanation:Underwriting in life insurance serves the dual purposes of assessing risk and deciding the terms of acceptance while also preventing anti-selection, which is the tendency of individuals to seek insurance when they suspect a high chance of experiencing a loss. By engaging in underwriting, insurance companies aim to maintain fair and sustainable practices.

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Q. What are the two primary purposes of underwriting in the context of life insurance?
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