What is the purpose of underwriting in life insurance?

The primary purpose of underwriting in life insurance is to evaluate risk and determine the premium for a policy. Underwriting is a systematic process in which insurers assess an applicant's health, lifestyle, and other pertinent factors to estimate the likelihood of a claim being made. This evaluation helps the insurer decide how much coverage to offer and at what premium rate.

By thoroughly assessing the risks associated with the applicant, underwriters can set premiums that adequately reflect the level of risk involved. This not only protects the insurer's financial stability but also ensures that policyholders contribute equitably based on their individual risk profile.

Other options do not accurately represent the main focus of underwriting. Determining beneficiaries is more about policyholder decisions than risk assessment. Assessing cash value accumulation usually pertains to permanent life insurance policies but is not a function of underwriting. Deciding the duration of policy coverage relates to the structure of the policy rather than the underwriting process, which is specifically concerned with risk evaluation and premium determination.