An Obligation to Represent and Disclose Material Facts as a Good Faith in Life Insurance Contract

Abstract

This study aims to analyze an obligation of explaining and revealing material facts and identify any kinds of violation of good faith in life insurance contract. It uses several approaches including statute approach, comparative approach, and conceptual approach. The result defines material facts as any kinds of facts the insurer needs in order to make decision whether accepting or objecting the possible risks assigned. The insurer needs to accurately and completely know the insured’s personal data and medical records, including disease suffered, smoking habits, and even an extreme exercise habit such as paragliding. Kinds of violation probably done by the insured can be in the form of (1) misrepresentation, which includes giving incorrect statement but not intentionally conducted (i.e., innocent) and providing incorrect explanation intentionally (i.e., fraudulent) due to personal benefit; (2) non-disclosure, which includes neither revealing the facts nor telling any fundamental information other parties need to know, not due to deliberateness but rather probably due to ignorance or innocence, and intentionally hiding particular facts in order to get personal benefits (concealment).

DOI: 10.5901/mjss.2017.v8n4s1p53