Insurance Cancellation. Martin A. Gurrentz applied for life ...

[vHAUNG6011]

Insurance Cancellation. Martin A. Gurrentz applied for life insurance from Federal Kemper Life Assurance Co through an insurance agent named Alfrey. In September 1982, Gurrentz filled out an application but paid no premiums. Between the submission of the application and the delivery of the policy, Gurrentz sought medical advice from a physician about an ear problem. On examination, a throat lesion was noted. A biopsy was done, and Gurrentz was advised that he had a throat malignancy, for which he subsequently received radiation treatments. Upon delivery of the policies, Gurrentz signed a statement stating that there had been no changes in his health status and that he had not seen a doctor since filing the application for insurance. In April 1983, Federal learned of Gurrentz's throat problem when he filed a claim under a separate medical health policy. After an investigation, Federal notified Gurrentz in February 1984 that it was canceling the life insurance policy and refunding all premiums paid. Was Federal able to rescind Gurrentz's life insurance policy? Explain.

Question 2

A company that has more than 25,000 worth of business with the federal government and does not state what action will be taken against employees who violate the company's drug-free policy would be in violation of:
 a. the Drug Prohibition Act
  b. the Drug Control in the Workplace Act c. the Drug-Free Workplace Act
  d. the Zero Tolerance Act
  e. the Drug Prevention in the Workplace Act

[Dnite]

Answer to Question 1

Insurance cancellation
Yes, Federal was entitled to rescind the life insurance policy because Gurrentz had made a material misrepresentation by claiming that there had been no change in his health status between the time of the application and the time that he received the policies. Material misrepresentation allows for cancellation of the policy by the insurer with proper notice and an appropriate refund.

Answer to Question 2

c

[vHAUNG6011]

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[kishoreddi]

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