What key factor does an underwriter consider when determining an applicant's risk?

An underwriter evaluates an applicant's health history as a crucial factor in determining risk because it provides insight into the individual's medical background and potential future health issues. Health history can reveal pre-existing conditions, chronic diseases, and patterns of health behavior that may influence the likelihood of future claims. For example, someone with a significant history of medical problems may present a higher risk for insurance companies compared to someone with a clean bill of health. This assessment helps insurers decide on the terms of coverage, premium rates, and whether to approve the application at all. Additionally, a thorough understanding of the applicant's health allows the underwriter to predict future healthcare costs, which is fundamental in the pricing of life and health insurance products.