How is "underwriting" defined in the context of life insurance?

The correct choice defines underwriting in the context of life insurance as the process of evaluating risk and determining premiums for insurance policies. Underwriting involves assessing various factors related to an applicant's health, lifestyle, occupation, and other personal details to gauge the likelihood of a claim being made. This detailed evaluation helps insurers decide how much premium to charge for the policy, ensuring that the risks are appropriately managed and that the insurer remains financially stable.

This process is crucial as it not only protects the insurance company from potential large losses but also helps maintain fair premium pricing among policyholders. By accurately assessing risks, insurers can tailor policies to individual needs while balancing their overall risk exposure.