Final answer:
The insured's deliberate failure to reveal material facts that would affect the insurer's decision to issue an insurance policy is called concealment. Concealment is considered fraud and can have adverse consequences for both the insurer and other policyholders.
Step-by-step explanation:
The insured's deliberate failure to reveal material facts that would affect the insurer's decision to issue an insurance policy is called concealment. Concealment is a form of fraud and is considered unethical and illegal in the insurance industry. When an insured intentionally withholds important information, it can lead to adverse consequences for both the insurer and other policyholders.
For example, let's say a person applies for life insurance and fails to disclose that they have a pre-existing medical condition that could significantly impact their life expectancy. If the insurer issues the policy without knowledge of this condition, it may result in higher costs for the insurance company and unfair premiums for other policyholders.
To address this issue, insurance companies usually require applicants to fill out detailed application forms and ask specific questions about their health, lifestyle, and other relevant factors. It is essential for applicants to provide accurate and complete information to ensure a fair and valid insurance contract.