General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
Insurance contracts are contracts of utmost good faith. For a health insurance applicant, this principle primarily requires:
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Utmost good faith means both parties must deal openly and honestly with each other. The applicant must disclose all material facts about his or her health because the insurer relies on those statements in deciding whether to accept the risk and at what premium. Failure to disclose material facts can support rescission of the policy. This principle is why applications ask detailed medical questions and why the answers to those questions matter so much to the insurer.
Why the other options are wrong
- A) Advance premium payment is a payment term, not the substance of good faith.
- C) A medical exam may be required by the insurer, but good faith concerns disclosure rather than examination.
- D) Nothing in the law requires an applicant to insure all members of the family.
Memory hook
Good faith means full disclosure and full truth in the application.