Karim is a cancer patient. But he hid this fact from LIC while taking a life
policy. On his death due to prolonged disease of cancer, LIC has refused to
pay compensation to his legal representatives. Do you think it is right act of
company? State the reason.

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Solution

Dear student,
Insurance is based on some principles, principle of Utmost Good Faith is one of them. According to this the insured and the insurer must disclose all the material facts to each other related to insurance policy. And if the insured hides any material fact from the insurance company then the insurance company can refuse to make compensation. And here Karim has hidden the fact that he is a cancer patient so LIC company has done right act by not providing compensation.
Regards

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Karim is a cancer patient. But he hid this fact from LIC while taking a life policy. On his death due to prolonged disease of cancer, LIC has refused to pay compensation to his legal representatives. Do you think it is right act of company? State the reason.

Karim is a cancer patient. But he hid this fact from LIC while taking a life
policy. On his death due to prolonged disease of cancer, LIC has refused to
pay compensation to his legal representatives. Do you think it is right act of
company? State the reason.