Life & Health Insurance Practice Exam 2026 - Free Practice Questions and Study Guide

The Underwriting Department is responsible for reviewing applications and assigning risk classifications because its primary function is to evaluate the risks associated with insurance applications. Underwriters analyze information provided by applicants, including health history, lifestyle choices, and other relevant factors, to determine the level of risk the applicant represents to the insurer.

Assigning risk classifications is crucial for setting premiums and determining coverage limits. By effectively assessing each application, underwriters can ensure that the insurer maintains a balanced and profitable portfolio while still offering coverage to deserving applicants.

In contrast, the Actuarial Department focuses on evaluating statistical data to develop pricing models and predict future claims. The Claims Department deals with processing claims made by policyholders after an incident occurs, ensuring that valid claims are paid out. Career Agencies are involved in the distribution of insurance products and may assist clients with policy choices but do not play a role in risk classification or application review.