PSI Life Exam Practice Test 2025 – Complete Preparation Resource

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Question: 1 / 150

What aspect of an insurance contract should the applicant be truthful about?

Personal preferences

Financial history

Health condition

Both financial history and health condition

In an insurance contract, the applicant should be truthful about both financial history and health condition. This is critical because insurance policies are based on assessing risk, and the insurer relies heavily on accurate information provided by the applicant to make informed decisions regarding coverage and premium rates.

Being truthful about financial history is essential as it helps the insurer evaluate the applicant's ability to pay premiums and assess the risk of claims associated with the individual's financial behavior. Misrepresentation in this area can lead to denial of claims or cancellation of the policy.

Equally important is the honesty regarding health condition. Insurers need to know the applicant’s medical history and current health status to determine the risk associated with insuring the individual. This includes existing medical conditions, past diagnoses, treatments, and any other relevant health information. A lack of transparency can have serious repercussions, including being denied coverage or having claims rejected later on.

Therefore, the correct answer encompasses both financial history and health condition, highlighting the importance of full disclosure in maintaining trust and integrity in insurance contracts.

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