The correct answer is D. All of the above.
Moral hazard is a situation where a person’s behavior changes after they have been insured. This can lead to the person taking more risks, knowing that they will be compensated if something happens.
A proposal is a document that is used to apply for insurance. It contains information about the person applying for insurance, as well as the risks that they are seeking to insure.
Insurers should view very seriously the conduct of the persons for life insurance cover whenever they seek profit by purchase of insurance. This is because life insurance is a contract that is designed to provide financial protection for the insured’s beneficiaries in the event of their death. If the insured is not acting in good faith, then the insurer may be able to void the contract.
Here is a more detailed explanation of each option:
- Moral hazard is about the intention and post purchase behaviour of an assured in most cases. This means that the insured’s behavior after they have been insured can change, and this can lead to them taking more risks. For example, if someone is insured against fire, they may be more likely to leave their stove on unattended, knowing that they will be compensated if their house burns down.
- Proposal is the basis of contract between a person seeking insurance cover and the insurer. This means that the proposal is a document that is used to apply for insurance. It contains information about the person applying for insurance, as well as the risks that they are seeking to insure. The insurer will use this information to decide whether or not to offer insurance, and to set the terms of the policy.
- Insurers should view very seriously the conduct of the persons for life insurance cover whenever they seek profit by purchase of insurance. This is because life insurance is a contract that is designed to provide financial protection for the insured’s beneficiaries in the event of their death. If the insured is not acting in good faith, then the insurer may be able to void the contract. For example, if someone takes out a life insurance policy on their spouse, and then murders them, the insurer may be able to refuse to pay out the death benefit.
In conclusion, the correct answer is D. All of the above.