If a question onan insurance application was answered incorrectly, will the policy be paid?

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If a question onan insurance application was answered incorrectly, will the policy be paid?

If the policyholder makes a mistake and does not answer a question regarding their health problems correctly, will the policy be paid if the error is not discovered within the 2 year contestability period and the policyholder remains alive and well?

Asked on October 19, 2010 under Insurance Law, South Carolina

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

There is no single or simple answer, since it depends in large part about what exactly the health problem was. As a general matter, if the question, if answered correctly, would have caused the insurer to decline coverage and/or to charge more--i.e. it goes to the essence of the insurance provided--than it is possible that if it comes out later, that would cause the insurer to not pay the policy. The policy is a contract; you pay a certain amount for a certain level of insurance. The price and the benefits you can buy are  based on, among other things, the answers to questions regarding your health. If contracts are based on a material or significant mistake, it may be possible for one or both of the parties to void the contracts. So a significant error on an application regarding relevant health issues that might have affected your getting the insurance or what you'd pay could result in the policy being disclaimed.


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