Underwriting is a broad term used for assessing the risks involved in offering a financial product to a consumer. Underwriting is basically the evaluation of the risk that the company will face and whether the insured is eligible for insurance. It is carried out in many fields such as mortgage, capital, insurance or credit. However the importance of underwriting is immediately palpable as far as life insurance is concerned.

• Insurance underwriting is done in order to protect the company’s financial interests and measure the risk associated with issuing a policy. Simply put, underwriting is a process that involves issuing of the insurance policy and determining other related factors such as the amount of premium.
• Insurance companies have their own standards and methods of evaluating risks and issuing insurance. For example for a car insurance underwriting, the past driving record of the applicant may be considered while issuing the policy. In a similar manner in life and health insurance a medical check up may be required before issuing the policy.
• The underwriters may completely deny the risk as unfeasible or may increase the premiums if the risk is high. Nowadays the amount of manual work required has been reduced when underwriting is done. This is because of the development in Information Technology and advancement in various branches of science and mathematics.
• The insurance company cannot stay in business if it constantly pays out more than it earns through premiums. Alternatively if the premiums are excessively soaring, the company might lose business to rival companies. It is the life insurance underwriter’s job to gather and revise data about every candidate, establish the probable peril of giving coverage, and lay down suitable rates so that the business makes a profit.
• The job of a life insurance underwriter is intricate and challenging, and needs strong analytical expertise, consideration to detail, and dependable opinion. Underwriters rely greatly on the use of computers and technology in their job, making good computer skills necessary. Efficient communication and excellent interpersonal skills are also essential, since an underwriter’s work often involves dealings with agents, policyholders, applicants, and other experts.

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