A software engineer applying for an individual life insurance policy deliberately marks "no" on the medical questionnaire when asked about any past cancer treatments. In reality, the applicant completed radiation therapy for thyroid cancer just two years prior. The insurer issues the policy at a standard rate. Fourteen months later, the insured is killed in a fatal car collision. While processing the death claim during the two-year contestable period, the insurer uncovers the undisclosed cancer treatment.
Which of the following statements correctly describe the legal consequences of this situation? (Select all that apply)
- The insurer is legally entitled to rescind the policy and deny the death benefit because the omitted information was a material misrepresentation.Cevap
- The applicant's deliberate withholding of their prior medical treatment constitutes concealment.Cevap
- CThe insurer must pay the claim because applicant statements are considered representations, which only allow for policy voidance if the concealed condition was the direct cause of death.
- DIf the producer had discovered the lie prior to submission, the producer possessed the legal authority to unilaterally correct the application to prevent fraud.
Cevap
The correct statements are that the insurer is entitled to rescind the policy due to a material misrepresentation, and that the deliberate withholding of information constitutes concealment.
The insurer has the right to rescind the contract because the applicant intentionally hid a material fact (concealment) that would have changed the underwriting decision (material misrepresentation). The fact that the insured died from an unrelated cause does not negate the insurer's right to void the policy during the contestable period.
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Anahtar Kavram
Material Misrepresentation and Concealment