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

The primary responsibility of the Claims Department is processing and paying claims for losses. This function is crucial because it directly relates to the policyholders' experience after they have suffered a loss and are relying on their insurance coverage. The department ensures that claims are evaluated based on the policy terms, the nature and extent of the loss, and available coverages. Their goal is to provide timely and equitable payment for valid claims, thereby fulfilling the commitments made in the insurance policy.

In contrast, the other functions mentioned—calculating policy rates, reviewing applications, and conducting market research—are typically responsibilities of other departments within an insurance company. Calculating policy rates falls under underwriting and actuary functions, where risks are assessed and premium amounts are determined. Reviewing applications is part of the underwriting process, where potential policyholders are evaluated for coverage eligibility. Conducting market research is generally associated with marketing and strategy departments, focusing on understanding market trends and customer needs rather than directly dealing with claims processing.