Completing the Application, Underwriting, Delivering Policies, Contract Law
If a life insurance application contains a clause that clearly conflicts with established state public policy, how is this clause treated under general contract and regulatory standards?
Answer and explanation
Answer: D. The Insurance Compact's fairness standard bars application clauses that are inconsistent, misleading, unfair, or against public policy. A lawful contract purpose cannot be created by an impermissible form clause.Source: Interstate Insurance Product Regulation Commission — Individual Life Insurance Application Standards — § 2.B. Fairness (1)
More completing the application, underwriting, delivering policies, contract law questions
- A Texas life insurer asks an applicant to take an HIV-related test for underwriting. What must occur before the test?
- After signing an application but before policy delivery, the proposed insured begins taking a newly prescribed heart medication. What should the proposed insured do?
- An adult applies for a policy on his own life and names his sister as beneficiary. Whose signatures does the application ordinarily require?
- An agent observes unusual funding behavior while selling a covered life product. What is the agent's proper AML role?
- An applicant applies without paying any premium. The insurer issues the policy exactly as requested. When is the contract formed?
- An applicant asks whether every answer on a life application is an absolute guarantee of literal accuracy. Which response is correct?
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