Insurance Contract Validity & Claims Process: Key Concepts in Health and Life
Insurance | QUESTIONS AND ANSWERS
1. Agreement (Offer & Acceptance)
Offer: Usually when the applicant submits the application
with premium. Acceptance: When the insurer issues the
policy as applied for.
2. Consideration
Applicant's consideration = premiums paid and truthful
statements in the application. Insurer's consideration = the
When is an Insurance Contract
promise to pay benefits.
Valid?
3. Competent Parties
Both parties must be legally competent (e.g., legal age, sound mind).
4. Legal Purpose
Contract must be for lawful objectives (no gambling, no illegal activity).
What does the Entire Contract The policy, application, and any riders; no side agreements allowed.
Clause include?
What is the Time Limit on Certain After 2 years, the insurer can't contest statements except in cases of
Defenses? fraud.
What is the Grace Period for 7 days.
weekly premium payments?
, What is the Grace Period for 10 days.
monthly premium payments?
What is the Grace Period for 31 days.
quarterly or annual premium
payments?
What happens if an insured's The insured can apply for reinstatement and pay the premium.
policy lapses?
Insurance | QUESTIONS AND ANSWERS
1. Agreement (Offer & Acceptance)
Offer: Usually when the applicant submits the application
with premium. Acceptance: When the insurer issues the
policy as applied for.
2. Consideration
Applicant's consideration = premiums paid and truthful
statements in the application. Insurer's consideration = the
When is an Insurance Contract
promise to pay benefits.
Valid?
3. Competent Parties
Both parties must be legally competent (e.g., legal age, sound mind).
4. Legal Purpose
Contract must be for lawful objectives (no gambling, no illegal activity).
What does the Entire Contract The policy, application, and any riders; no side agreements allowed.
Clause include?
What is the Time Limit on Certain After 2 years, the insurer can't contest statements except in cases of
Defenses? fraud.
What is the Grace Period for 7 days.
weekly premium payments?
, What is the Grace Period for 10 days.
monthly premium payments?
What is the Grace Period for 31 days.
quarterly or annual premium
payments?
What happens if an insured's The insured can apply for reinstatement and pay the premium.
policy lapses?
