Life & Health Insurance Exam (National Portion)General InsuranceEasy
A life insurance applicant intentionally provides false information about their current health status on the application form to secure a lower premium. Which legal doctrine has the applicant violated?
- AConcealment
- BEstoppel
- CAdhesion
- DWaiver
Show answer & explanationAnswer & explanation
Correct answer: A. Concealment
Concealment refers to the intentional withholding of material information that would affect the insurer's decision to issue a policy or the premium charged. Providing false information is a form of concealment.
Why the other options are wrong
- B. Estoppel prevents a party from asserting a right or fact inconsistent with a previous position or representation.
- C. Adhesion describes a contract where one party dictates the terms to another party with less bargaining power.
- D. Waiver is the voluntary relinquishment of a known legal right.
Concealment
The intentional withholding of material facts by an applicant that, if known, would have influenced the insurer's decision regarding policy issuance or premium.
- Must be intentional
- Must be material to the risk
- Can lead to policy voidance
Memory trick: Honesty is the best policy, especially when signing an insurance contract.