Washington Life Producer Practice Exam

What guarantees that the statements supplied by an insurance applicant are true?

1. Guarantee

2. Affidavit

3. Warranty

4. Declaration

The correct answer is: Warranty

The concept that guarantees the truthfulness of statements provided by an insurance applicant is referred to as a warranty. In the context of insurance, a warranty is a specific type of promise made by the insured that certain facts are true or will be true. If it is later discovered that the statements made in the warranty were untrue, this can result in the insurance company voiding the policy. Warranties are deemed critical in insurance contracts because they directly relate to the risk the insurer is taking on. For example, an applicant might warrant that they have never had a certain condition or that a property being insured is in good condition. Should any of these warranties be proven false, the insurer has the right to deny claims or rescind the policy. In comparison, an affidavit is a written statement confirmed by oath, but it does not carry the same legal implications for insurance as a warranty. A declaration provides information but lacks the assurance that it is necessarily true. Therefore, the warranty is the most appropriate term to use when discussing the guarantees regarding the veracity of an insurance applicant's statements.