Abc insurance company has accepted a life insurance application which contains unanswered questions. the company then makes the application part of the life contract. in this situation, the insurer has
The Correct Answer and Explanation is:
When ABC Insurance Company accepts a life insurance application that contains unanswered questions and then issues a policy incorporating that incomplete application as part of the contract, the company is waiving its right to that information. By proceeding with the issuance of the policy, the insurer is demonstrating that it accepts the risk as it stands, even with the missing information.
Correct Answer:
The insurer has waived its right to have those questions answered.
Explanation
In the context of insurance law, an insurer’s conduct in accepting an incomplete application and issuing a policy can result in a legal waiver of its right to require answers to the unanswered questions. A waiver occurs when a party voluntarily and knowingly relinquishes a known right. In this case, the right being waived is the right to have complete information before issuing the policy.
When ABC Insurance receives an application with blank or unanswered questions, it has several options. The company can:
- Return the application for completion,
- Follow up to obtain the missing information, or
- Proceed with underwriting and issue the policy regardless.
If ABC chooses the third option—issuing the policy despite the incomplete application—it is effectively signaling that it does not consider the unanswered questions material or that it is willing to accept the risk without that information. As such, the insurer cannot later claim that the applicant’s failure to answer those questions invalidates the contract.
Courts generally hold insurers to a high standard in this area to protect applicants. Allowing insurers to ignore blank questions during underwriting, only to later use those blanks to deny claims, would be unfair and deceptive. Therefore, by making the incomplete application part of the life insurance contract, ABC Insurance has waived its right to insist upon those missing answers, and it must honor the contract as it stands.
This principle reinforces the insurer’s responsibility to conduct due diligence during the underwriting process
