‘Donald’s wife Ana held a whole life insurance policy worth $200,000 from Delight Insurance Company, the premiums for which had all been paid. He later decided to buy a second life insurance policy for his wife from Elite Insurance Company, with a cover of $100,000. In addition to providing insurance for life, this second policy included a $50,000 cover for critical illnesses. Ana was a smoker, and this is a fact that was not divulged to Elite Insurance Company at the time of buying the policy. She also suffered from hypertension and was on medication. Six months after purchasing the second policy, Ana suffered from a stroke, which would qualify as a Critical Illness as per the terms of the policy from Elite Insurance Company. She later died from the resulting complications. An insurance claim was filed by her husband and during the investigation, it was discovered by Elite Insurance Company that Ana was a smoker. The doctors attributed her death to her hypertensive condition which was further aggravated by the fact that she was a smoker.’ His claim was rejected.

You are required to:

a) Which principles of insurance relate to the above case? (150 words minimum)

b) What could have been done differently to remain within the bounds of the principles of insurance? ( 50 words minimum)

c) Is Donald eligible for claims, critically evaluate the decision of Insurers? (150 words minimum)

Answer rating: 100% (QA)

a In the insurance world there are six basic principles that must be met ie insurable interest Utmost good faith proximate cause indemnity subrogation and contribution It states the same thing as in t... View the full answer