What is the primary purpose of underwriting in health insurance?

The primary purpose of underwriting in health insurance is to assess risk and determine eligibility. Underwriting is a crucial process where insurers evaluate the information provided by applicants to decide how much risk the company is willing to accept in insuring an individual. This involves analyzing various factors such as age, medical history, lifestyle choices, and other relevant criteria to gauge the potential costs associated with insuring that person.

When underwriters assess risk, they are establishing whether the individual poses a higher chance of requiring significant medical care, which in turn can impact premium rates and the decision to offer coverage. By accurately evaluating risk, insurance companies can ensure that they maintain profitability while still providing coverage to those who need it. This not only protects the insurer but also helps keep premiums manageable for policyholders by distributing risk across a broad pool of insured individuals.

In contrast, while increasing premiums, selling policies, or denying applicants are all aspects that might occur in the insurance process, they are not the primary focus of underwriting. Rather, underwriting specifically centers on assessing the risk and determining the eligibility of applicants for coverage.