Florida Life and Health Insurance License Practice Test 2026 - Free Insurance Practice Questions and Study Guide

Underwriting in insurance is a crucial process that involves evaluating the risk associated with insuring an individual or entity. This process determines the eligibility of applicants for coverage and the premiums that will be charged. Underwriters assess various factors such as health status, lifestyle choices, and other risk-related information to establish how much risk the insurer is taking on with each policyholder.

By thoroughly evaluating these risks, underwriters can ensure that the insurance company remains financially stable while offering appropriate rates that reflect the level of risk involved. This not only helps in protecting the insurer's interests but also allows for a balanced approach in setting premiums based on the customer's risk profile.

The other options refer to different aspects of the insurance industry. Selling insurance products is a function of agents and brokers, while filing a claim pertains to the process of claiming benefits after an event occurs. Evaluating market opportunities relates to business strategies rather than the individual risk assessment that underwriting entails.