Which type of contract implies that the applicant is bound to provide truthful information in the application?

In the context of life insurance, a personal contract is characterized by the principle that the contract is specifically tailored to the individual insured, which includes an implicit expectation that the applicant must provide accurate and truthful information during the application process. This obligation arises because the insurance company relies on the information given by the applicant to assess risk and determine the terms of the insurance policy.

The relationship between the insurer and the insured is founded on good faith—also known as "utmost good faith" or "fiduciary duty." This means that the parties must act honestly and disclose all relevant facts. Since life insurance contracts involve a personal contract, the applicant's honesty is crucial. Any misrepresentation or omission can lead to the denial of a claim or even cancellation of the policy.

The other types of contracts mentioned do not carry the same implications regarding truthfulness and honesty. A unilateral contract, for instance, involves a promise made by only one party, typically the insurer, who is bound to fulfill their promise if the insured pays the premium. A bilateral contract typically involves mutual promises between parties. An implied contract is formed through actions rather than explicit statements, which does not encapsulate the specific obligations of an insurance applicant.