Why are medical exams conducted in the underwriting process?

Medical exams are conducted in the underwriting process primarily to help assess the health of the applicant for eligibility and to determine appropriate premium rates. Underwriters rely on comprehensive health evaluations to evaluate the risk profile of potential policyholders. This information is crucial because it allows insurance companies to set premiums that reflect the level of risk associated with insuring an individual based on their health status.

When an applicant undergoes a medical exam, the results provide detailed insights into their medical history, current health conditions, and potential health risks. This thorough assessment enables underwriters to make informed decisions about whether to approve the application and at what premium rate, reflecting the risk the insured may present to the insurer over the life of the policy.

Other options present ideas that do not align with the primary purpose of a medical exam in underwriting. For instance, increasing a policy's cash value is related to the policy itself after issuance, not during underwriting, while assessing the insurance company's financial integrity is more concerned with the company's stability than with individual applicants. Similarly, determining the amount of insurance needed relates to the applicant's coverage requirements rather than their health assessment. Thus, option B accurately captures the fundamental reason for conducting medical exams in the underwriting process.