While filling in an insurance application, many people hesitate over whether a minor piece of medical history needs to be mentioned. This article explains why truthful declaration is the heart of an insurance contract, and what concealment can lead to.
An insurance contract rests on good faith
An insurance contract relies on trust to a greater degree than an ordinary contract. The company decides whether to accept the risk and calculates the premium from the information we declare on the application. If material information is concealed or stated inaccurately, the foundation of the contract is wrong from the start.
What can follow from withholding information
The law gives the insurer the right to avoid the contract within the specified period if it finds that a material fact was concealed or a false statement made. The consequence is that the contract may become voidable, the claim is refused, and only part of the premium may be returned under the conditions of the law [check the latest information].
What makes this a particular shame is that in many cases the insured has paid premiums for years, but the cover does not take effect on the day it is genuinely needed, because of information missing from the application date.
What counts as "material information"
Generally, information that would have led the company to decide differently had it known — to decline the risk, load the premium, or exclude a condition. Common examples are a history of illness, hospital admissions, existing conditions, and risk behaviours the application asks about. The simple rule: answer every question on the application truthfully.
What to do if you're unsure whether to mention something
Declaring is better than leaving it out. A full declaration may lead the company to request a medical examination or to set certain conditions, which sounds like more trouble, but the result is a solid contract you can claim on with confidence, without worrying that the declaration will be raised later.
In short
Good cover starts with a straightforward application. If there is medical history you are unsure about, ask your agent to go through the application questions with you. Starting with transparency is how you protect your own rights over the long term.