Which of the following describes "underwriting" in the insurance industry?

Underwriting in the insurance industry refers to the evaluation of risk and exposure of potential customers. This essential process involves assessing applicants' information, such as their health status, lifestyle choices, and other relevant factors, to determine the level of risk they present to the insurer.

The goal of underwriting is to establish whether to accept the insurance application and under what terms, such as premium rates and coverage limits. This careful analysis ensures that the insurance company can maintain its financial stability by balancing the potential risks and pricing policies accordingly. By effectively underwriting policies, insurers protect themselves against excessive claims and ensure they can meet their obligations to policyholders.

The other choices pertain to different aspects of the insurance operation. Claim payments relate to settling claims after a loss occurs, selling insurance policies is part of the distribution process, and marketing insurance products refers to promoting them to potential customers. Each of these actions is essential for the functioning of an insurance company but does not encapsulate the core definition of underwriting.