Maria and Joe are married and co-own a construction supply business. They are also employees of the construction business and participate in the employee group insurance plan. A salesperson for Peace of Mind Insurance approached the company management and convinced them to change their insurance coverage to his company. As part of the new insurance plan, the employees could apply for long-term disability coverage. Maria did so. In order to qualify for coverage, Maria had to meet with a medically trained representative of Peace of Mind Insurance to review her medical history. During that interview, she mentioned several visits to doctors over the past several years but didn't get into the details. Based on the interview with the Peace of Mind representative and on the financial statement forms she filled out, Maria was insured for $4000 per month in case she should become disabled.

Several years later, Maria found herself unable to work because of vertigo and back problems. She applied to receive her long-term disability benefits but, after investigating her case, Peace of Mind Insurance denied her claim, stating that it was previously unaware of these facts:

• Maria had talked to five different medical doctors in the four years before she signed up with Peace of Mind Insurance. The reason for each visit was either that she was concerned about frequently being dizzy or had back pain that was interfering with her daily life.
• Maria's financial statements showed that she had not made $100 000 in annual taxable income as she had claimed. Instead, her annual income as an employee of the family business never exceeded $45 000.
• Maria had not disclosed that she had disability coverage from a different insurance company at the time she signed up for Peace of Mind Insurance.

Will Peace of Mind Insurance be able to avoid its long-term disability contract with Maria? Should the original insurance contract stand even if no payment is to be made on this particular claim?