In the context of life assurance, what does 'utmost good faith' require from both parties?

• A. Full disclosure of all relevant information
• B. Confidentiality of personal information
• C. A fair claims process
• D. No discrimination in pricing

Answer: (A)

'Utmost good faith' is a fundamental principle in insurance contracts, including life assurance. This principle requires all parties involved, particularly the insurer and the insured, to act honestly and transparently. Full disclosure of all relevant information ensures that each party has a complete understanding of the risks involved and the facts surrounding the insurance agreement.

For the insurer, this means obtaining all material information from the insured that could affect the risk assessment and underwriting process. For the insured, it involves providing accurate and complete information about their health, lifestyle, and any other factors that may influence the terms of the life insurance policy. This mutual honesty is crucial in establishing a fair and effective insurance contract.

Confidentiality, a fair claims process, and non-discrimination in pricing, while important aspects of the insurance industry, do not directly exemplify the essence of 'utmost good faith' as thoroughly as the principle of full disclosure. They are practices that support ethical dealings but do not encapsulate the primary obligation inherent in the 'utmost good faith' doctrine. Thus, full disclosure of all relevant information is the correct answer, reflecting the core requirements of honesty and integrity in the life assurance context.