Life & Health Insurance Practice Exam 2025 - Free Practice Questions and Study Guide

The assertion that only material misrepresentations can void the contract is accurate because in the context of insurance, a material misrepresentation is one that would influence an insurer's decision to accept the risk or determine the premium. Materiality is pivotal; if a misrepresentation affects the insurer's judgment regarding the risk level or insurability of the applicant, it can provide grounds for voiding the contract.

Insurers rely on the accuracy of the information in applications to assess risk effectively. When a misrepresentation is deemed material, it undermines the foundational trust inherent in the insurance agreement. This principle ensures that both parties maintain a level of integrity regarding the disclosures made during the underwriting process.

Other factors regarding misrepresentations can exist, such as unintentional or minimal misrepresentations; however, they do not have the same weight in terms of voiding the contract unless they substantially affect the insurance company's decision-making process. Thus, focusing on material misrepresentation captures the essential understanding of how misrepresentation impacts the validity of insurance contracts.