What is the primary purpose of medical underwriting in life assurance?

The primary purpose of medical underwriting in life assurance is to ensure fair premiums relative to risk. This process involves assessing the health and medical history of applicants to evaluate the likelihood of a claim being made during the policy term. By accurately appraising the level of risk each individual presents, insurers can set premiums that reflect those risks appropriately.

A critical aspect of this process is that it promotes fairness for both the insurer and policyholders; those with lower health risks may pay lower premiums compared to those with higher risks. This ensures that individuals are charged based on their actual risk level rather than a one-size-fits-all approach. Consequently, medical underwriting plays a vital role in maintaining the viability of the insurance pool, while protecting the interests of all policyholders.

The emphasis on fairly pricing insurance products found in this option aligns perfectly with the principles of actuarial science, where risk assessment is foundational. This is why medical underwriting is deemed crucial in the functioning of life assurance companies.