What does it mean if a policy is 'underwritten'?

When a policy is described as 'underwritten,' it signifies that the risk assessment and acceptance decisions have been made. Underwriting is a crucial process in insurance, where underwriters evaluate the potential risks associated with insuring a particular individual or entity and determine whether to accept that risk, as well as the terms and conditions of coverage.

Through underwriting, insurers gather information, assess risk factors, and ultimately decide if they will provide coverage, how much coverage they will provide, and at what price (insurance premium). This process involves analyzing various data points including health history, property values, and other relevant variables that help in quantifying the risk level.

This option is fundamental to the insurance process, as it directly impacts the policy's creation and the premiums charged. The other choices address aspects that are either not related to the necessary underwriting decision (like cancellation, sale, or payment of premiums) or do not reflect the core function of what underwriting entails in the context of insurance.