What is the primary role of underwriting in life insurance?

The primary role of underwriting in life insurance is to assess risk and establish appropriate premiums for applicants. Underwriters evaluate various factors related to an applicant's health, lifestyle, occupation, and family medical history to estimate the level of risk associated with insuring that individual. This assessment is critical because it helps insurance companies maintain financial stability by balancing risk and ensuring that the premiums collected are sufficient to cover potential claims.

By determining the right premium based on the assessed risk, underwriters ensure that the insurance product remains affordable for low-risk individuals while appropriately charging higher premiums to those who present a greater risk of mortality. This risk-based pricing helps insurers create a sustainable insurance pool, allowing them to meet their obligations to policyholders while staying profitable.

In contrast, the other options focus on functions that are not primarily associated with underwriting. For instance, claim settlements pertain to the claims process after a policyholder's death, market trends relate to broader economic factors affecting the insurance industry, and customer service satisfaction pertains to interactions with policyholders rather than the underwriting process itself.