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CHAPTER 10

THE GRAVY TRAIN

10.3.5Material Risks KNOWN to the Life Assurance Company
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The proposers (in this case my wife and I) in a Life Assurance Contract have the command of means of knowledge regarding the various risk factors (the material facts relating to their current and historical state of health) that would influence the mind of a prudent insurer’s decision whether or not to accept the risk associated with the Life Assurance Contract, and under what conditions.

The proposers are duty bound to disclose all such material facts; if they fail to do so the contract is voidable.


But this duty to disclose is a mutual one.


The Life Assurance Company is under a duty to disclose all facts known to them, which are material either to the nature of the risk sought to be covered or to the recoverability of a claim under the Policy, which a prudent insured would take into account in deciding whether or not to place the risk for which he seeks cover with that company.

(1)

The most important risk sought to be covered by the borrower / proposer is the risk that the Mortgage Loan will be Repaid.

(2)

Any risk associated with the Value of the Endowment Fund throughout the duration of the Policy is very much material to the recoverability of a claim under the Policy.



In addition to the materiality of the Risks associated with DEPENDENCE on Bonus (as discussed in Section 10.3.1 above), the Risk associated with the Probability that the borrower / proposer will in fact achieve Bonus is also very much material both to the risk that the Mortgage Loan will be Repaid and to the Value of the Endowment Fund throughout the duration of the Policy.

By keeping back such circumstances within their knowledge, Irish Life induced my wife and I to estimate such Risk as if it did not exist; we were deceived.

Because the Endowment Mortgage Contract is a contract of the Utmost Good Faith, Irish Life’s failure to disclose this Risk (a material fact) to my wife and I renders the contract voidable. [See Section 2.3.4: The Duty to Disclose and Silence as a Misrepresentation, (c) Contracts requiring the Utmost Good Faith (Uberimma Fides).]

 

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