General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
A 16-year-old signs an application for an individual disability policy without a parent's involvement. Regarding the element of competent parties, this contract would most likely be:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
One of the four elements of a valid contract is that the parties have legal capacity. A minor generally lacks full capacity, so a contract made with a minor is typically voidable at the minor's option. Insurers therefore commonly require an adult policyowner for coverage on a minor. The contract's enforceability is not cured by paying a premium, and the protection runs to the minor, not the insurer.
Why the other options are wrong
- B) Payment of premium does not cure a capacity defect; the contract remains voidable by the minor.
- C) The minor, not the insurer, holds the right to void on grounds of incapacity.
- D) The size of the premium does not affect the capacity analysis.
Memory hook
Minors can duck the deal - capacity protects them, regardless of premium paid.