Post – Claim Underwriting:

A Life And Health Insurer’s Boon Or Bane

 

Gary Schuman

 

I.

Introduction

Life and health insurance companies find themselves in an extremely competitive environment.[1]  Industry consolidation, greater sophistication of the consuming public and easy access to information have forced insurers to carefully review the manner in which they conduct business.  They must constantly respond to new products introduced by the competition and look for ways to become more accessible in order to maintain existing customers and obtain additional business.

Insurers compete for business in many ways.  One method is to simplify the process of buying and selling insurance by looking for ways to streamline the application and underwriting processes. [2]  Not all individual insurance products require the same degree of underwriting.  Some insurance applicants who seek large amounts of life, medical or disability coverage can be approved only after extensive medical, personal and financial information has been gathered and carefully evaluated.[3]  Other applicants – such as those applying for low amounts of coverage – may be approved with only the information contained in the application.[4]

An insurer’s duty to investigate an applicant’s health and background before issuing coverage must be balanced with the time and money involved in doing so.  It is physically and economically impossible for an insurer to fully and completely investigate every potential insured to try and discover the less obvious health defects.[5]  In order to make thorough medical and background examinations of every applicant for insurance, similar to those most insurers now make when the amount applied for is large, the insurer’s costs would not only significantly increase the price of insurance but also seriously inconvenience the individual applying for the coverage.[6]

II.

The Insurance Application and Underwriting Processes

Regardless of the size or type of insurance sought, the first formal step in the making of a life or health insurance contract is the completion and signing of a written application by the person who seeks to obtain the insurance.[7]  The applicant’s health status is critical to a life or health insurer’s ability to evaluate the risk it is being asked to insure[8] and the application for insurance is one of the most important risk assessment tools provided to the insurer and its underwriters.[9]

The application contains a general identification of the applicant and a description of the type of insurance coverage desired.  In addition, depending on the type of insurance applied for, it may be very detailed requesting information about the applicant’s employment, health and insurance history and other information, or it may be as simple as listing the insured’s name, address and beneficiary.[10]

Insurers usually design applications for lower face value coverage such as industrial,[11] supplemental[12] and credit insurance[13] to obtain all the necessary underwriting information, so that the underwriter will have to gather little or no additional information.  These applications typically contain fewer and simpler health questions designed to ensure that the applicant fits the profile established by the insurer for the coverage.  Completed applications are then submitted to the insurer’s underwriting department for review and evaluation.[14]

Underwriting is intended to ensure that each proposed insured receives an equitable, consistent evaluation and is charged an appropriate premium for the coverage offered.[15]  One of the basic principles of insurance is that each individual insured should pay a premium that is proportionate to the amount of risk the company assumes for that person.[16]

The home office underwriter’s primary responsibility is to evaluate an individual’s anticipated mortality[17] or morbidity,[18] depending on the coverage applied for, in order to determine whether to approve that person for insurance coverage according to the insurer’s underwriting manual.[19]  An underwriting manual is a detailed listing of various health and social conditions with information on impairments.  It provides a guide to suggested underwriting action when impairments are present.[20]  An insurance company is entitled to determine what risks it chooses to accept for insurance,[21] but it also has a responsibility to follow consistent risk selection practices and following the manual helps ensure that the insurer is acting in a fair manner.[22]

The agent plays an extremely important role in the application and underwriting process.  This is especially true for the lower face value policies.[23]  Underwriters have traditionally relied on the agent to gather initial information that can indicate whether a proposed insured is eligible for the coverage requested.[24]  Agents see applicants in person, make an initial assessment of a proposed insured, and determine whether that person is likely to be approved for a specific type of coverage by performing field underwriting.[25]  Field underwriting is the process of gathering initial information about the proposed insured and screening applicants who have requested coverage.[26]  The agent is expected to obtain answers to every question on the application and to record the information obtained directly from the proposed insured’s response.[27]  Home office underwriting, if any, is performed at the clerical level because the rate structure for this type of coverage makes little allowance for detailed assessment by an underwriter.[28]

This field-issued insurance is sold on the assumption that the applicant is truthfully disclosing to the agent all information requested on the application.  An insurer relies on the truthfulness of the answers given by an insurance applicant, and the insured has the corresponding duty to supply complete and accurate information to the insurer.[29]  The insurance company is entitled to the requested information so that it can assess the significance of the facts presented in the application.[30]

The insured, however, may not always disclose all information requested on the application.  If an insurer does not discover the applicant’s misrepresentation and issues a policy based on the information provided in the application, the false information may later be discovered during an investigation of a claim submitted on the policy.[31]  Coverage is then rescinded based on the underwriter’s determination that had the information been truthfully disclosed the policy would not have been issued.[32]  Insurance carriers understandably seek to avoid liability on policies that they would not have underwritten,[33] or for which they would have charged more[34] had the application contained all of the material facts.[35]  This action often results in litigation.

III.

Post-Claim Underwriting

            Plaintiffs and some courts have attacked the above-described practice, referring to it as post-claim,[36] or retroactive underwriting.[37]   This conduct has been described as an insurance company asking an applicant for health-related information and issuing a policy based on the responses without undertaking any independent investigation of the insured’s medical history.[38]  A claim is subsequently submitted, and only then does the insurer investigate the claimant’s prior medical history by requesting additional information to see whether the insured actually qualified for coverage at the time it was purchased.  Then, should it be determined the insured made a material misrepresentation coverage is rescinded.[39]

Plaintiffs charge that post-claim underwriting is an unethical practice in the insurance industry.[40]  Their contention is that insurers engaging in that conduct are acting improperly and in bad faith when, instead of looking to pay the claim, they begin to search for all the things in the application that will allow the policy to be rescinded.[41]  Extra-contractual and even punitive damages have been sought and occasionally awarded against insurers for this practice.[42]

A. Plaintiffs’ Challenges

1. Covenant of Good Faith and Fair Dealing

The first challenge for a plaintiff is premised on the fact that it has been widely accepted by courts and legislatures for many years that insurers have a special relationship with their insureds due to the nature of insurance contracts and the unequal bargaining position between the insured and the insurance company.[43]  The economic dominance and superior ability of the insurer to protect itself carries special obligations when dealing with its insureds.[44]

In return for the timely payment of premiums, the insured relies on the insurer’s promise to provide necessary protection when certain contingencies occur.  When buying insurance an insured usually does not seek to realize a commercial advantage but, instead, seeks protection and security from financial loss.[45]  The whole purpose of insurance is defeated if an insurance company can refuse, without justification, to pay a valid claim.[46]

This duty of good faith and fair dealing imposes an obligation on the insurer not to impair the right of the insured to receive policy benefits and to give at least as much consideration to the insured’s interests as it does its own.[47]  When an insured under a life insurance policy dies, an insured under a health policy is hospitalized or requires medical treatment, or an insured becomes disabled, the insurer must act quickly upon receiving the claim.  Life, health and disability insurers have contractual obligations under their policies to their insureds and their beneficiaries to pay stipulated sums of money upon the happening of contingencies stated in their contracts.[48]

The implied obligation of good faith contemplates at least that the insurer will diligently investigate the facts to enable it to determine whether a claim is valid, will fairly evaluate the claim, and will thereafter act promptly and reasonably in rejecting or settling the claim.[49]  When investigating a claim, an insurance company has a duty to search for evidence that supports its insured’s claim.[50]  If the insurer seeks to discover only the evidence that defeats the claim, it holds its own interest above that of its insured and breaches the covenant of good faith and fair dealing.[51]

This implied duty arises because the first-party contract and the nature of the relationship with the insured effectively give the insurer an almost adjudicatory responsibility.[52]  Thus, implicit in the contract and this relationship is the insurer’s obligations to deal fairly with its insured.[53]  The insurer that delays unreasonably or refuses to honor its obligations violates the implied covenant of good faith and fair dealing.[54]

Critics contend an insurer has an obligation to its insureds to perform all necessary underwriting at the time coverage is applied for, and not thereafter.  In other words, good underwriting practice requires the insurer to investigate an applicant’s medical history before approving the policy.[55]  It is argued that it is unfair for an insured to purchase an insurance policy, pay all required premiums, and believe they are protected for covered losses, only to learn after the claim is submitted that they are not insured.[56]

The duty of the insurer to an insured is especially important when the insurer rescinds coverage.  In this situation, the insured is not merely at the mercy of the insurer to be treated fairly in the processing of a single claim, but must rely on the insurer’s good faith for the continued existence of any coverage.[57]  Forfeiture of an insurance policy is strongly disfavored, especially when the event that gives rise to the insurer’s liability has already occurred.[58]  Not only is the insured prevented from recovering on the claim at issue, but also, such as when health insurance is involved, may be precluded from obtaining other coverage.[59]  Courts attempt to prevent an insurer from taking advantage and failing to honor the reasonable expectations of insureds and intended beneficiaries.

2. Duty to Investigate

Insurance plaintiffs challenging the practice of post-claim underwriting in essence take the position that any misrepresentations contained in the application are excused because the insurer is fully capable of obtaining whatever facts it needs before it decides to issue coverage.  If an insured is not an acceptable risk, the application should be denied immediately, not after the policy is issued.[60]  The burden of investigating and ascertaining the facts affecting the applicant’s insurability should fall on the insurer.  The insurer should not be allowed to deny benefits to the insured or beneficiary on the basis of information which, if it had been more careful to investigate, the insurer could have obtained before issuing the policy.[61]  The insuer that refuses to investigate until after a claim is filed runs the risk that it has insured someone when it otherwise would not have.[62]

B. Cases Supporting Plaintiffs’ Position

The leading case challenging the practice of post-claim underwriting is Lewis v. Equity National Life Insurance Co.[63]  On April 12, 1989, Mrs. Florence Lewis purchased an individual intensive care policy that provided a $200 per day benefit.  Her monthly premium was $3.  Specifically, she answered “no” to the application question: “Has any person proposed for intensive care or heart attack insurance ever been diagnosed or treated as a victim of heart attack, heart condition, heart trouble or any abnormality of the heart?”[64]

She was injured in an automobile accident on March 3, 1990 and spent one night in the ICU of a local hospital.  Mrs. Lewis subsequently completed a claimant’s statement for the insurer.  The claim form contained a statement from one doctor indicating heart treatment for a coronary occlusion in 1983.  The claim form was submitted to the underwriting department and the policy was rescinded when it was determined that Mrs. Lewis had a pre-existing heart condition.  The insurer undertook no further investigation, nor were inquiries made to the agent or any physician pertaining to the accident, Mrs. Lewis’ injury or her heart condition.

Mrs. Lewis sued alleging that although the agent asked no questions about her medical history, she told the sales agent that she was diabetic and had heart problems.  She had also provided the agent with the names of her physicians.  Mrs. Lewis signed the application, although she did not read it.  The agent stated, to the contrary, that he did ask the usual health questions and that Mrs. Lewis denied having a heart problem.

The insurer sought summary judgment.  The trial court granted the motion insofar as it related to Mrs. Lewis’ claim for punitive damages.  A trial was then held and a jury awarded Mrs. Lewis $200.00 for her one day ICU confinement.

Mrs. Lewis appealed, arguing the punitive damage question should have been submitted to the jury.  She contended that the insurer did not have a legitimate or arguable reason to deny her claim in that the sales agent made any misrepresentation on the policy application.  So too, Equity National did not properly investigate her claim and engaged in the illegal practice of post-claim underwriting by waiting until the claim had been filed to obtain information and making underwriting decisions which should have been made when the application was reviewed, not after the policy was issued.  The Mississippi Supreme Court agreed and reversed the trial court’s partial summary judgment order.

The court, addressing the issue of post-claim underwriting, reasoned that “an insurer has an obligation to its insureds to do its underwriting at the time a policy application is made, not after a claim is filed.”[65]  Finding that the insurer "clearly waited until after Mrs. Lewis filed a claim on her policy before it chose to underwrite her policy or evaluate the risk involved,"[66] the court determined that the question of punitive damages should have been submitted to the jury for consideration.[67]  Specifically, the court said:

 

It is patently unfair for a claimant to obtain a policy, pay his premiums and operate under the assumption that he is insured against a specific risk, only to learn after he submits a claim that he is not insured, and, therefore, cannot obtain any other policy to cover the loss.  The insurer controls when the underwriting occurs. It therefore should be estopped from determining whether to accept an insured six months or more after a policy is issued. If the insured is not an acceptable risk, the application should be denied up front, not after a policy is issued.  This allows the proposed insured to seek other coverage with another company since no company will insure an individual who has suffered a serious illness or injury.[68]

 

The court acknowledged that small policies such as the one sold to Mrs. Lewis are issued under simplified underwriting guidelines.  Still, it determined that in essence, an insurer may not be able to rely on an insured’s candor in completing an application and must bear the burden and expense of investigating medical histories of its insureds prior to issuing policies.[69]  This places the risk of the insured’s dishonesty upon the insurer.[70]

So too, the Alabama Supreme Court in Huff v. United Insurance Co.,[71] was extremely critical of the practice of post-claim underwriting.  There, an agent for the insurer sold a life insurance policy to Mr. John Huff.  The policy application contained questions concerning both his and his wife’s health.  No health problems for either individual were indicated on the completed application.  However, Mr. Huff had been treated previously for heart problems and Mrs. Huff had suffered from diabetes, along with complications including blindness.

Shortly after the policy was purchased, Mr. Huff died of a heart attack.  United then investigated and discovered his medical condition.  The insurer refused to pay the death benefit because Mr. Huff had made misrepresentations about his health on the application.  The widow sued and the trial court granted the insurer partial summary judgment on all claims alleging fraud.  The Alabama Supreme Court affirming the trial court’s decision, also stated:

 

This fact situation illustrates an all-too-common situation for Alabamians in life insurance transactions.  United issued the policy without investigating the applicant’s health.  As the law in Alabama currently stands, an insurance company may issue a life insurance policy with its knowledge of its applicant’s health coming solely from its agent’s questioning of the applicant about his or her health history.  The benefits from this type of transaction lie solely in favor of the insurance company and its agent.  The insurance company receives premiums month after month, while the agent retains a commission from the sale.  But when the insured dies, the insurance company refuses to pay the benefits provided by the policy.  Its refusal is based upon its discovery, for the first time, that the insured’s health was poor.  When the policy is sold, an agent is not required to delve thoroughly into the applicant’s background for the details of his health history.  Such a requirement could prevent situations like the one in this case.[72]

 

There was no evidence that the agent knew of Mr. Huff’s poor health when he sold him the policy.  However, the court thought that had United been required to investigate Mr. Huff’s medical history before issuing the policy, it most likely would not have been issued.  The court stated that it would be in the interest of the insurer and the applicant but also of judicial economy for the insurer to investigate the applicant’s health history before issuing a policy.  However, until the insurer is required to conduct a pre-issue investigation, the sale of this type of life insurance policy with no serious attempt to determine the applicant’s true health history will continue to frustrate the “beneficiaries” of the insured.

C. Insurance Industry Position

These critics and courts, unfortunately, do not consider or simply choose to ignore long standing principles of first-party insurance law as they relate to the insured’s obligations to the insurer and the requirements an insurer must satisfy before coverage may be rescinded.  Policies issued on the basis of incorrect or even fraudulent information provided by an insured result in excessive claims and increased premiums for all insurance customers.[73]  If insurers are precluded from voiding an insurance policy in which a material misrepresentation was made in the application, insurers would likely have to depend entirely on independent examinations to assess their relative risks and the total cost of all premiums would substantially increase.[74]

Trust is an essential element of underwriting.[75]  Although underwriters carefully examine applications for signs of false or misleading information, they presume that the information presented by the applicant and the agent is true.[76]  It is a well established principle of insurance law that an applicant has a duty to act in good faith towards an insurer.[77]  This duty includes making a full and complete disclosure of all relevant information requested when completing an insurance application so the insurer can evaluate the risk and determine whether the applicant meets its underwriting standards.[78]  The proposed insured alone has complete knowledge of facts concerning his health, and the statements and answers in the application often are the determining factors the insurer uses in deciding whether to issue a policy.[79]  This traditional view allows an insurer to rely upon the information contained in an insured's application for insurance and provides that it does not have to independently verify the accuracy of reported information.[80]

The law also recognizes that insurers must be provided with the ability to challenge claims without fear of tort liability.  The obligation to pay meritorious claims is accompanied by the right to deny those claims that are without merit.[81]  The insurer should not be required to honor a contract that it entered into on the basis of the proposed insured’s representations contained in the application when in fact these statements were false and the risk that the insurer assumed was either greater than that which it believed it was assuming or was one that the insurer would not assume at all.[82]

The plaintiffs’ challenge to post-claim underwriting is especially important because it not only attacks a specific insurer’s conduct but also an entire method of doing business nationwide in the insurance industry.  This article examines the statutory and common law principles surrounding the insurer/insured first-party relationship.  It will demonstrate that post-claim underwriting is not illegal but, to the contrary, is a valid method utilized by insurers to protect themselves from adverse selection practiced by a small portion of the public that purchased insurance.

An insurer is entitled to rely upon the information provided by prospective insureds on applications when issuing coverage and any material misrepresentation contained therein provides the insurer with an appropriate basis to rescind coverage.[83]  There are already in force adequate protections for the insured against an insurer’s abusive conduct.  In fact, many of the cases finding insurer liability for post-claim underwriting really are using this doctrine as a “catch-all” for existing insurance law principles when rejecting an insurer's ability to rescind due to the insured’s misrepresentation contained in the application.

IV.

Statutory/Common Law Governing Rescinding Coverage

Generally, the duty to provide insurance is strictly a matter of contract law.[84]  Absent an agreed or implied contractual provision, there is no duty to insure.[85]  An application for insurance is an offer that, like any other offer, does not become a contract until accepted by the insurance company.  No insurance company can be required to provide insurance coverage to every applicant who seeks coverage.  The power of acceptance lies with the insurance company, and without its acceptance, no valid contract exists.[86]  Once an insurance is issued, however, there are in place specific rules governing an insurer’s ability to cancel coverage should it discover false answers in the application.

A. Rescinding Coverage

It is a basic principle of contract law that if one party to a contract has been led to make it by the misrepresentation of the other party, the contract is voidable at the option of the innocent party.[87]  This principle is as applicable to insurance policies as to other contracts.[88]  A combination of statutory law and court decisions determine whether a misrepresentation will avoid an insurance contract.  The rule in most states is that when an applicant for life, health or disability insurance is asked on an application for material information about his health or medical history and the specific information requested is not provided or answered untruthfully, and coverage is issued in reliance thereon, the insurer is entitled to rescind the policy.[89]  With respect to all of the grounds for rescission, the insurer bears the burden of proof to establish facts supporting rescission[90] by either a preponderance of the evidence[91] or by clear and convincing evidence.[92]

            1. Misrepresentation

A misrepresentation in an insurance application is an untrue statement or fact.[93]  Incomplete answers or a failure to disclose material information on an application for insurance may also constitute a misrepresentation.[94]  However, a misrepresentation alone is not by itself grounds for denial of coverage.  The “materiality” of the misrepresentation must be established.[95]

            2. Materiality

The question of materiality is determined by the extent the false answer influenced the insurer to assume the risk of coverage.[96]  Generally, if the insurer with knowledge of the true facts would not have issued a policy or would have issued one under different terms from that which it did issue, the test of materiality has been satisfied.[97]  When a misrepresentation is material it deprives the insurer of its freedom of choice in determining whether to accept the risk.[98]  If the information given by the applicant is false, but the insurance company would have issued the same policy regardless, then it is not material.[99]  Consequently, the question of materiality is determined at the time the policy was issued.[100]

Materiality often is a question of fact[101] but, in the appropriate situation, may become a question of law.[102]  In most cases the proof offered by the insurer consists of testimony or affidavits by company underwriting personnel or the medical director as to what the company would have done had it had all the facts,[103] supplemented, in some cases, by portions of the company’s underwriting manual.[104]

            3. Reliance

The third element is that, at the time the policy was issued, the insurer reasonably relied on the representation made by the applicant.[105]  An insurance company cannot avoid liability on a policy if it can be shown the insurer did not actually rely on the applicant’s misrepresentation.[106]  This failure of reliance can be established if the insurer had actual knowledge of the true facts, or at least a sufficient indication that would have put a prudent person on notice.[107]  This may preclude the insurer from rescinding its contract if it disregarded that notice and did not make reasonable inquiries to confirm or refute those indications.[108]

Similarly, when an applicant gives sufficient information to alert an insurance company to his particular medical condition or history, the insurer then becomes obligated to make such further inquiry as is reasonable under the circumstances in order to ascertain the facts surrounding the information given.[109]  The question of what constitutes “sufficient indications” is ordinarily one for the trier of fact.[110]

The mere fact that the insurer conducts an independent investigation does not, by itself, indicate a lack of reliance.[111]  This is true unless the investigation discloses facts sufficient to expose the falsity of the representations of the applicant or facts that are of such a nature as to place upon the insurer the duty of further inquiry, but the insurer decides to issue the policy anyway.

This point is illustrated in Story v. Safeco Life Insurance Co.[112]  The insurer rescinded a life insurance policy based on the insured’s material misrepresentation of his health on the application.  The insured admitted on the application only that he was under treatment for controlled high blood pressure.  Two doctors and a VA Hospital were listed on the application.  One doctor was contacted and a policy was issued at a rated premium.  The insured died less than one year later.  Only then did the insurer contact the VA hospital and learn the insured had been treated for coronary artery disease.  Coverage was rescinded.

The plaintiff argued the insurer knew or reasonably should have known the insured had this condition.  The court found that an insurer having knowledge the insured had some or all the risk factors for a disease does not necessarily equate with knowledge that the insured actually has the disease.  So too, the court rejected the plaintiff’s argument that once an insurer begins an investigation it is accountable for any information obtained or which easily could have been obtained.  The insurer’s investigation in not obtaining VA Hospital records was at most negligently conducted.  Mere negligence in discovering facts concerning an insured’s misrepresentations is not equivalent to knowledge of those facts.[113]

            4. Additional Requirements for Rescinding Coverage

Many courts hold that a material misrepresentation alone, even if innocent, voids the contract.[114]  Some state statutes and courts require that an insurer seeking to avoid a policy on the basis of misrepresentation also show fraud by the applicant.[115]  Intent to deceive may involve either the insured’s knowledge of the falsity of the statement and its materiality to the risk[116] or circumstances in which the insured must have known the statement to be material to the risk.[117]  Several states have statutes that require that the facts misrepresented must contribute to the actual loss.[118]  In these states the law imposes a far greater burden on an insurer than that imposed at common law.

            5. Application Questions

Questions in an application seek to elicit material information.  The insurance company that intends to rely exclusively on the application should ask questions tailored to yield all the information that it needs.  This is because the use of a nonmedical application may produce a pool of policyholders who will have higher mortality or morbidity rates than those that would be produced by full medical underwriting.  The foregoing requirements governing an insured’s duty to disclose and an insurer’s ability to rescind coverage are applied based on the type of questions asked by the insurer in the application.

                        a. Objective Questions

Objective questions call for information within the applicant’s knowledge, such as whether he has been examined or treated by a physician, or “have you ever had (naming various conditions).”  These representations are considered to be objective because their truth or falsity may be established by direct evidence.[119]  These questions do not ask the applicant to respond in the affirmative only if the applicant believes the treatment or conditions presented a serious health threat.  An applicant’s failure to disclose pertinent information will not be excused on the grounds that the applicant thought the problem to be minor.[120]  Nor must an insurance applicant completely understand all effects of a health condition before a duty to disclose this information to an insurer is triggered.  The insurance company, not the insured, determines whether the matters concerning which the insured consulted a physician and whether the treatment received was serious or unimportant.  An insured is not entitled to take this choice away from the insurer by failing to disclose information specifically inquired about that is considered by the insurer to be material to the risk.[121]

                        b. Subjective Questions

In contrast, there are other situations in which an applicant is asked to respond to questions on the application that call for statements that amount to matters of opinion or judgment.  Subjective questions are concerned with more ambiguous issues, such as what is the state of the applicant’s health.[122]  Courts have been more lenient when reviewing an applicant’s misrepresentations made in response to a subjective question than to an objective question because the question is directed toward probing the applicant’s knowledge and belief.[123]  Insureds in such instances sometimes interpret their policy application questions very differently from their insurers.  Insureds believe that their responses to application questions are correct.

In order to be material and entitle an insurer to cancel a policy, an incorrect statement to a subjective question must be one that the applicant could be reasonably expected to have sufficient information to answer or state he lacked knowledge to give a responsive answer.[124]  There is no breach of the duty to disclose if the applicant is ignorant of the relevant information, or if the applicant acting in good faith does not understand the significance of the information he fails to disclose.  A layperson will not be held to the level of knowledge or understanding that a doctor or other expert might have had.[125]  However, an applicant’s belief is to be accepted only to the extent that it is not clearly contradicted by the factual knowledge on which it is based.  Thus, if the underlying facts known to the insured were in clear contradiction to his statements, his stated belief will not be accepted and the insured will be deemed to “know” of the misrepresentations.[126]

Representations of good health, as distinguished from answers to purely factual questions, are subjective and call for statements of opinion.