Question

Linda approaches Alex, an insurance agent, to purchase a critical illness insurance policy. Linda informs Alex that she is genetically inclined to developing Type 2 diabetes and that's the main reason why she's purchasing the policy. However, Alex who is aware that Type 2 diabetes is not covered under the policy, fails to inform Linda about it in order to avoid losing his commission. In this case, how can Alex's behavior be described?

a) Alex failed to act in good faith.
b) Alex induced his client to insure.
c) Alex engaged in tied selling.
d) Alex engaged in fronting.

Answer 1

Alex's behavior can be described as inducing his client to insure.

Step-by-step explanation:

Alex's behavior can be described as b) Alex induced his client to insure. By withholding important information about the coverage of the policy, Alex influenced Linda's decision to purchase the critical illness insurance policy, even though it did not cover her main concern of Type 2 diabetes. This is known as inducing the client to insure, as Alex's actions led Linda to make the purchase based on incomplete or misleading information.