Arizona Life and Health Practice Exam

What happens to a health insurance policy if an insured person provides a false statement on their application?

1. The policy remains valid regardless

2. The policy can be voided

3. The policy will automatically expire

4. The insured is issued a warning only

The correct answer is: The policy can be voided

When an insured individual provides a false statement on their health insurance application, the policy can be voided due to the principle of "misrepresentation." Insurance contracts rely on the accuracy of information provided by the insured to assess risk and determine eligibility for coverage. If a false statement is discovered, particularly if it pertains to material information—details that would have influenced the insurer's decision to issue the policy—the insurer has the right to void the policy. This action upholds the integrity of the underwriting process and ensures that individuals seeking coverage are honest about their health conditions and history. A voided policy means that it is treated as if it never existed, releasing the insurer from any obligation to provide coverage for claims arising during the period the policy was considered valid. This underlines the importance of full transparency in the application process, as misleading information can have serious repercussions for both the insured and the insurer.