Page 3 - Life Assurance
P. 3
4/1
Representation
A representation is a statement made by an
applicant for insurance before the contract is
affected. Although the representation need not be
in writing, it is usually made in a written application.
An example of representation in life insurance
would be "Yes" or "No" to a question as to
whether or not the applicant had ever been
treated for any physical condition by a doctor
within the previous five years. If a representation
is relied upon by the insurer in entering into the
contract, and if it proves to be false at the time it is
made or becomes false before the contract is made,
there are legal grounds for the insurer to avoid the
contract.
Avoiding the contract does not follow
unless the misrepresentation is material to the
risk. That is, if the truth had been known, the
contract either would not have been issued at all or
would have been issued on different terms. If the
misrepresentation is inconsequential, its falsity will
not affect the contract. However, a
misrepresentation of a material fact makes the
contract avoidable at the option of the insurer. The
insurer may decide to affirm the contract or to avoid
it. Failure to cancel a contract after first learning
about the falsity of a material misrepresentation may
67 Life41/life/life 08
Representation
A representation is a statement made by an
applicant for insurance before the contract is
affected. Although the representation need not be
in writing, it is usually made in a written application.
An example of representation in life insurance
would be "Yes" or "No" to a question as to
whether or not the applicant had ever been
treated for any physical condition by a doctor
within the previous five years. If a representation
is relied upon by the insurer in entering into the
contract, and if it proves to be false at the time it is
made or becomes false before the contract is made,
there are legal grounds for the insurer to avoid the
contract.
Avoiding the contract does not follow
unless the misrepresentation is material to the
risk. That is, if the truth had been known, the
contract either would not have been issued at all or
would have been issued on different terms. If the
misrepresentation is inconsequential, its falsity will
not affect the contract. However, a
misrepresentation of a material fact makes the
contract avoidable at the option of the insurer. The
insurer may decide to affirm the contract or to avoid
it. Failure to cancel a contract after first learning
about the falsity of a material misrepresentation may
67 Life41/life/life 08
