Question

Christine is meeting with an insurance advisor as she is considering purchasing insurance, however she is unsure what the rules are surrounding the cancellation of the policy. Which of the following statements made by the advisor are correct?

a. The policy can be cancelled by both, the policyholder or the insurer at any time during the life of the contract.
b. The insurer will void a policy immediately for any non-payment of premiums, forcing the insured to re-apply for coverage.
c. The insured may cancel the policy only if she finds a misrepresentation on the policy.
d. "Insurance contracts are unilateral contracts, which impacts each party's right to cancel the contract differently."

Answer 1

Insurance policies are complex and can be cancelled by either the policyholder or the insurer, depending on the terms and local laws. An insurer usually cannot void a policy immediately for non-payment without a due process, and the insured may cancel the policy for a variety of reasons, not just for misrepresentation. Insurance contracts are unilateral, affecting cancellation rights.

Step-by-step explanation:

When Christine is meeting with an insurance advisor and is uncertain about the rules for cancelling an insurance policy, the advisor might state several things. However, only some statements would be correct:

• The policy can often be cancelled by both, the policyholder or the insurer, but the rights and process can differ according to the terms of the policy and local regulations.
• An insurer typically cannot void a policy immediately for any non-payment of premiums without following a due process which usually involves providing notice and a grace period.
• The insured may generally cancel the policy for various reasons, not only if there is a misrepresentation on the policy.
• "Insurance contracts are unilateral contracts, which impacts each party's right to cancel the contract differently," is a correct statement as insurance policies are indeed contracts where only the insurer makes a legally enforceable promise.

It is essential to remember that insurance policies can be complex, with terms specific to the policy and influenced by local laws. Government regulations and laws impact the insurance industry and need to be taken into account when considering insurance options.