An individual applies for a $1 million life insurance policy. On the application, the applicant truthfully states their primary occupation is an 'office manager' but intentionally leaves the 'secondary occupations' section blank, deliberately concealing their part-time work as a professional deep-sea salvage diver. The applicant knows this dangerous activity would significantly increase the premium or result in a declined application. A year after the policy is issued, the insured dies in a diving accident.
Which of the following statements accurately classify the applicant's actions and the resulting legal consequences? (Select two)
- The deliberate omission of the highly dangerous secondary occupation constitutes material concealment, giving the insurer valid grounds to void the policy.Cevap
- The applicant's intentional deception to secure favorable underwriting terms is classified as a moral hazard.Cevap
- CThe omission is legally classified as a morale hazard, as failing to list all jobs is considered a matter of administrative carelessness rather than fraud.
- DThe statements on the life insurance application are treated as absolute warranties by law, meaning the coverage was never legally in force regardless of the applicant's intent.
Cevap
The correct statements are that the deliberate omission constitutes material concealment allowing the insurer to void the policy, and that this intentional deception is classified as a moral hazard.
The applicant's deliberate decision to withhold information about a highly dangerous occupation is a classic example of material concealment, which is a form of fraud. Because the insurer would have charged a higher premium or denied the policy had they known the truth, the concealment is material to the risk, granting the insurer the right to void the contract. Furthermore, this intentional act of dishonesty to defraud the insurer introduces a moral hazard.
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Anahtar Kavram
Fraud, Material Concealment, and Moral Hazards