Purpose

Foundation of the insurance contract:
- Request for coverage: Formal application for insurance
- Source of information: Primary underwriting document
- Part of contract: Becomes part of the policy when issued
- Legal document: Legally binding statements

Two-Part Structure

Part 1: General Information
- Personal data: Name, address, date of birth, SSN
- Occupation: Job title, duties, income
- Coverage requested: Face amount, type of policy, riders
- Existing insurance: Other policies in force or applied for
- Replacement: If replacing existing coverage
- Beneficiary: Primary and contingent beneficiaries

Part 2: Medical Information
- Health history: Past and current medical conditions
- Family history: Health of parents, siblings
- Lifestyle: Smoking, alcohol, drugs, hazardous activities
- Medications: Current prescriptions
- Medical treatment: Doctors, hospitals, dates
- Height/weight: Build information

Required Signatures

Who must sign:

Proposed insured:
- Always required: Person whose life is insured must sign
- Authorization: Consents to investigation and medical records release
- Date signed: Date of signature important for coverage

Applicant/owner:
- If different from insured: Owner must also sign
- Responsible party: Person who will own policy and pay premiums

Example:

Business buy-sell agreement:
Applicant/Owner: ABC Corporation
Proposed Insured: CEO John Smith

Both must sign:
- John Smith (insured) - authorizes medical records
- ABC Corp officer (owner) - applying for and will own policy

Producer/agent:
- Witnessed: Agent signs as witness
- Certification: Agent certifies proper completion
- Date and location: Where and when application taken

Warranties (Historical)

Guaranteed to be literally true:

Characteristics:
- Exact truth required: Must be 100% accurate
- Part of contract: Become part of insurance contract
- Breach voids policy: Any inaccuracy voids coverage
- Strict standard: No room for error
- Materiality irrelevant: Even immaterial errors void policy

Example (historical):

Warranty: "I have never been treated by a physician"
Truth: Treated for sprained ankle 10 years ago

Even though:
- Sprained ankle immaterial to life insurance
- Applicant forgot about it
- Not intentional misrepresentation

Result under warranty: Policy void

Problem with warranties:
- Too harsh
- Minor errors void policies
- Unfair to policyholders

Representations (Modern Standard)

Statements believed to be true:

Characteristics:
- Substantially true: Must be substantially (not literally) true
- Good faith: Made in good faith to best of knowledge
- Materiality matters: Must be material to risk to void policy
- Fair standard: Reasonable and equitable
- Default rule: All application statements treated as representations

Legal standard:

Representations must be:
1. Substantially true (not necessarily exactly true)
2. Material to the risk
3. Relied upon by insurer

Example:

Application: "Last doctor visit: January 2023"
Actual: February 2023 (routine checkup, nothing found)

Substantially true: Yes (minor date error)
Material to risk: No (routine visit, no issues)
Policy voidable: No

Comparison Table

Feature Warranty Representation Standard Literally true Substantially true Strictness Exact accuracy Reasonable accuracy Materiality Immaterial errors void Must be material to void Modern use Rare in life insurance Standard in life insurance Fairness Harsh to insured Balanced Intent Irrelevant Considered

Modern Approach

Entire contract provision:
- Application as representations: States all application answers are representations, not warranties
- Copy attached: Application copy attached to policy
- Part of contract: Only application and policy form the contract
- No oral agreements: No oral statements can modify

Material information affects underwriting decisions. Agents must complete applications accurately, cannot suggest false answers, and their knowledge is generally imputed to the insurer. Premium receipts (conditional, approval, or binding) determine when coverage begins.

• Two-part application: Part 1 (general), Part 2 (medical)
• Signatures required: Proposed insured always; owner if different; agent
• Warranties vs representations: Warranties literally true; representations substantially true
• Modern standard: All application statements treated as representations
• Material information: Would affect underwriting decision, classification, or premium
• Concealment: Intentional failure to disclose material information
• Misrepresentation: False statement of material fact (innocent or fraudulent)
• Agent's role: Complete accurately, cannot suggest false answers
• Conditional receipt: Provides coverage if insurable as of application/exam date
• Entire contract provision: Policy + application = entire contract
• MIB: Medical Information Bureau - database of medical codes