1. For health insurance, an applicant generally has an insurable interest in:

His or her own health and that of immediate family

Insurable interest in health insurance typically exists in one's own health and in close family members whose illness would cause the applicant financial loss.

2. The principle of indemnity in health insurance means coverage is intended to:

Restore the insured toward the financial position before the loss

Indemnity seeks to make the insured whole, not to allow profit; many medical expense plans pay based on actual covered expenses incurred.

3. Health insurers manage adverse selection primarily through:

Underwriting and policy provisions

Underwriting, waiting periods, and pre-existing condition provisions help insurers manage adverse selection, the tendency of higher-risk applicants to seek coverage.

4. An applicant's answers on a health insurance application are generally treated as:

Representations believed true to the best of the applicant's knowledge

Statements on the application are representations; if material and false, they may affect the validity of the contract within the contestable period.