Ethics Contract Formation, Disclosure & Provisions question: Owen died in a car accident before the agent handed

EthicsContract Formation, Disclosure & Provisions

Insurer X issued Owen's policy on the terms he applied for and sent it to his agent for unconditional delivery. Owen had already paid the first premium with his application, and his health had not changed. Owen died in a car accident before the agent handed him the policy. What is the insurer's position?

A The policy is treated as delivered to Owen, so the contract is in force
B The contract never took effect, because Owen never received the policy
C The insurer refunds the premium, because delivery is a condition precedent
D The contract is in force only if the agent signs a delivery receipt

Show the answer and explanation

Answer: A. The policy is treated as delivered to Owen, so the contract is in force

When a policy issued on the terms applied for is sent to the insurer's agent for unconditional delivery, the Insurance Act deems it delivered to the insured, but not to the insured's prejudice. With the premium paid and no change in insurability, all the conditions for the contract to take effect are met, so the death benefit is payable. The physical handover by the agent is not required. Source: Insurance Act (BC), RSBC 2012, c. 1, s. 48(2) (current to 6 Oct 2026; as at 12 Oct 2026); the other common-law provinces' Insurance Acts have the same uniform provision.

Common mistake

Thinking the client must physically receive the policy even when the insurer has released it for unconditional delivery.

Practice more Ethics Contract Formation, Disclosure & Provisions questions

Exam-style questions with worked answers, then full timed mocks. Free to start.

Start practicing →

Study note: Contract Formation, Disclosure & Provisions Ethicspractice questions & mock exams

Related Ethics practice questions

Ravi, 49, of Brandon, bought a $500,000 life policy last year after completing a written medical questionnaire. He is now refinancing his business and his lender wants to see the full contract. Ravi writes directly to the insurer asking for a copy of the entire contract and of the written medical answers he gave as evidence of insurability. It is his first such request. What must the insurer do?Hana completed an application for $400,000 of term life insurance on 2 June and paid nothing with it. The policy was issued on the terms she applied for and mailed to her agent on 20 June. Before the agent delivered it, Hana was diagnosed with a serious heart condition. The agent then delivered the policy and collected the first premium. Is the contract in force?Jerome has been a licensed life agent in Winnipeg for six years. A new client, Viktor, 52, owns two restaurants and wants a single-premium non-registered universal life policy to leave money to his nephew. At their second meeting Viktor hands Jerome $12,000 in Canadian bank notes for the premium, saying his business deals mostly in cash. No exception under the regulations applies. What must happen under the federal anti-money-laundering rules?

Build a daily practice habit — a few exam-style questions a day, with worked answers. Free to start.

Start practicing →

Original study material mapped to the public CISRO curriculum; not a real test question.Not affiliated with CISRO, CCIR or any provincial insurance regulator. Verify figures and rules against current guidance before relying on them.