MTHEL131 Lecture Notes - Disability Insurance, Life Insurance, Cash Flow
22 Nov 2013
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Both parties rely on accuracy of information. An offer must be made by 1 party comes in the form of an application. Acceptance the offer must be accepted by the other party comes in the form of a policy. Payment must be made comes in the form of premiums. The person must be capable" have the mental capacity to make a decision. The person must be old enough to take part in a contract (in ontario, you have to be 16 to enter a life insurance contract) The contract must be for a lawful purpose (contracts about illegal things are null) Financial stability/soundness of the insurer ensures their ability to keep promises. A flawed underwriting process can cause the company to go bankrupt. Principles of underwriting: ensure financial soundness, be fair, prevent economic. With business insurance, the waiting period is 1-7 days, because the business needs the cash flow to stay open.
