Insurance Contracts & Underwriting Flashcards
6 cards from real BCP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Insurance Contracts & Underwriting flashcards as text
What are the four essential elements of a valid insurance contract in Singapore?
Answer: Offer, acceptance, consideration, and legal capacity (with insurable interest)
A valid insurance contract requires: offer (proposal), acceptance (by insurer), consideration (premium), and legal capacity of the parties, plus insurable interest to distinguish it from wagering.
What is 'risk selection' in the underwriting process?
Answer: The process of evaluating and deciding which risks to accept, decline, or modify
Risk selection is the underwriting process of evaluating proposed risks, deciding which to accept (and on what terms), which to decline, and which require modifications (such as exclusions or higher premiums).
What is a 'proposal form' in the insurance context?
Answer: The insured's formal application for insurance, providing material facts for underwriting assessment
A proposal form is the formal application completed by the prospective insured, disclosing all material facts about the risk so the insurer can make an informed underwriting decision.
What is the underwriting significance of a 'moral hazard' assessment?
Answer: It assesses the character, integrity, and attitude of the insured toward risk and potential claims
Moral hazard assessment evaluates the insured's character, honesty, and attitude — an insured who is dishonest or careless represents a higher risk of inflated or fraudulent claims, affecting the underwriting decision.
What is an 'endorsement' on an insurance policy?
Answer: A document that modifies the terms, conditions, or coverage of an existing policy
An endorsement is a written document attached to an insurance policy that modifies its original terms — adding, removing, or amending coverage, exclusions, or conditions during the policy period.
What is the difference between 'renewal' and 'replacement' of an insurance policy?
Answer: Renewal continues the existing policy on (possibly revised) terms; replacement involves taking out a new policy with potentially different coverage
Renewal continues the existing insurance relationship, typically on the same or revised terms, maintaining coverage continuity. Replacement involves taking out a new policy, which may involve new underwriting and different terms.