Washington Life Producer Practice Exam

Intentional withholding of material facts that would affect an insurance policy's validity is called?

1. Fraud

2. Concealment

3. Deceit

4. Misrepresentation

The correct answer is: Concealment

The correct answer is concealment. This term specifically refers to the act of intentionally withholding material facts that are crucial for the other party to know, particularly in contexts such as insurance. When a party conceals information, they are preventing the other party—usually the insurer—from making an informed decision about the risk they are taking on. In the insurance realm, this can significantly impact the validity of a policy since insurers rely on full disclosure to assess risks and determine premiums. While fraud involves deception with the intention of securing unfair or unlawful gain, concealment zeroes in on the specific act of not revealing important information. Misrepresentation, on the other hand, often involves providing false information rather than withholding it. Deceit tends to refer to a broader context of dishonesty rather than the specific actions related to insurance applications. Thus, concealment correctly describes the intentional omission of relevant facts in this scenario.