General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
The primary purpose of underwriting in health insurance is to:
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Underwriting is the process of selecting and classifying risks. By evaluating each applicant's health history, occupation, and other risk factors, the underwriter places the applicant in the appropriate risk class so that the premium charged reflects the expected claims cost for that class. Accurate selection and classification keep the risk pool sound, produce equitable pricing, and help control adverse selection across the block of business.
Why the other options are wrong
- A) Underwriting does not guarantee low premiums; it prices each class according to expected loss.
- B) Risk pooling remains fundamental to insurance; underwriting makes pooling fair by grouping similar risks.
- C) Setting benefit amounts after a loss occurs is a claims function, not underwriting.
Memory hook
Underwriting prices the risk before it becomes a claim.