Texas General Lines — Life, Accident, Health and HMOGeneral InsuranceHard
A life insurance applicant intentionally withholds information about a pre-existing heart condition on their application. This action, if material to the insurer's decision, is an example of what insurance concept?
- AConcealment
- BRepresentation
- CMisrepresentation
- DWarranty
Show answer & explanationAnswer & explanation
Correct answer: A. Concealment
Concealment is the intentional withholding of material information that is relevant to the insurance risk. By intentionally not disclosing the heart condition, the applicant is concealing a material fact.
Why the other options are wrong
- B. A representation is a statement believed to be true to the best of one's knowledge, but not guaranteed. The act here is withholding, not making a statement.
- C. Misrepresentation is making a false statement of a material fact. While serious, the scenario describes withholding information, not making a false statement about it.
- D. A warranty is a statement guaranteed to be true, and if breached, can void the policy. While related to truthfulness, it's not the act of withholding.
Concealment
Concealment is the intentional withholding of a material fact by an applicant for insurance that is crucial for the insurer to properly assess the risk.
- Intentional act of omission
- Information must be material to the risk
- Can void a policy, especially within the incontestability period
- Different from misrepresentation (false statement)
Memory trick: Concealment: 'Con'cealing a 'Deal' of truth.