Texas Life Agent Practice Exam

What are statements made by an insurance applicant that are expected to be true called?

1. Warranties

2. Conditions

3. Representations

4. Declarations

The correct answer is: Representations

Statements made by an insurance applicant that are expected to be true are referred to as representations. These statements are important because they help the insurer assess the risk associated with providing coverage. When an applicant fills out an insurance application, they provide personal information and other details about their health, lifestyle, and other relevant factors. The insurer relies on these representations to make decisions about issuing a policy and determining the premiums. If it turns out that a representation is false, the consequences will depend on the nature of the misrepresentation. If it is deemed material, meaning it would have influenced the insurer's decision to provide coverage, the policy could be invalidated. However, minor inaccuracies that do not affect the risk assessment generally do not lead to cancellation or denial of a claim. Warranties, on the other hand, are statements or guarantees that certain facts are true and are considered more absolute than representations. Conditions typically refer to stipulations outlined in the insurance policy that must be fulfilled for coverage to be valid. Declarations are part of the insurance policy itself, summarizing key details such as the type of coverage, limits, and premium amounts. In contrast to these terms, representations carry the understanding that the applicant believes the statements to be true at the time they are made