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One of the fundamental principles of any kind of insurance contract is utmost good faith. This means that each party has a duty to disclose all material facts to the other. With life insurance applications, lying therefore has a broader definition that includes non-disclosure. Non-disclosure is less prevalent in life insurance cases, since applications are comprehensive enough to require the applicant to make a statement on material facts. Lying would involve material facts only. A material fact is one which would influence the life underwriter's decision.

The life insurance application is the means through which insurers procure information relevant to underwriting. Statements on applications are classified as either warranties or representations. A warranty is a statement by the applicant that is guaranteed to be true, while a representation is something that the applicant purports to be true. Statements on life insurance applications are generally considered to be representations.

If a material misrepresentation is made on an application before the policy is issued, the insurer may choose to decline the risk. Once the policy is issued, an insurer can void an insurance contract only if the policy's incontestability clause permits it. In most cases, the policy is considered incontestable two years from the date of issue of the policy.

A lot of people are not truthful about their habits on life insurance applications. This would include information about smoking or drinking. Some life insurance policies can be issued without certain tests being conducted. Applicants have used this as an opportunity to be strangers to the truth. In a few cases, insurance sales representatives may encourage the applicant to understate a habit on an application. That would be a separate issue and would not mitigate the fact of your misrepresentation. If the habit is reported before the policy becomes incontestable, the insurer would most likely require relevant tests. Then if the habit is proven, the policy may be rated or voided. If the application is rated, then the applicant or policy owner may have to make retroactive payments. This is because the insurer would have to recoup the rated premium from the policy's inception.

Your extent of knowledge is critical to whether you make an innocent or fraudulent misrepresentation. In some cases, innocent misrepresentations may not be grounds for voiding a life insurance contract. If you were unaware that you had a condition and subsequently

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