Question 3
Thabo applies for life insurance with TrustLife Insurance Co. He completes a
proposal. In the proposal the following question is posed: "Has an insurance
proposal by you ever been declined or has a life insurance policy of yours ever been
cancelled?” Thabo fills in his answer as “No” and later that day he submits the
proposal. The next day Thabo is informed by SA Life Insurance Co that his
application for life insurance made to that insurance company is declined. Thabo
does not inform TrustLife as he has already submitted his proposal and at the time
he completed the proposal for TrustLife, he was telling the truth.
a) Explain (and motivate) whether you think the conduct of Thabo of not informing
TrustLife of the declined proposal is a positive or negative misrepresentation? 3)
(b) Thabo queries the meaning of a particular clause in the proposal. In response
TrustLife sends Thabo the following explanation: “Our company interprets the clause
to mean that the company will not be liable to pay any claim until such time as the
first premium is received.” Later on it transpires that the company actually does not
interpret the clause in that manner. If this statement is actually an incorrect
interpretation of the relevant clause, indicate whether you consider this answer to be
an opinion as to the law or a statement of fact. [1]
Indicate also whether, in view of your previous answer, this answer is a
misrepresentation or not. [1]
(a) The conduct of Thabo of not informing TrustLife of the declined proposal can be seen as a negative misrepresentation. Thabo filled in the proposal with the answer "No" to the question about a declined or cancelled insurance policy, which is not true anymore as his application with SA Life Insurance Co was declined. By not informing TrustLife about this change in his circumstances, Thabo is misrepresenting his current insurance status and withholding relevant information from TrustLife.
(b) The statement provided by TrustLife regarding the interpretation of the clause in the proposal can be considered an opinion as to the law. It is an explanation of how TrustLife interprets the clause, which indicates their understanding or belief about the legal implications of that particular clause.
If this statement is indeed an incorrect interpretation of the relevant clause, then it can be seen as a misrepresentation. TrustLife provided Thabo with incorrect information about the meaning of the clause, which can potentially influence his decision to enter into a contract with them.