2.4 Other Legal Concepts
Contract law is by no means as simple as stated here. Business can be undertaken in various forms. In most instances, ways of doing business are governed by law.
Waiver
A waiver is the voluntary surrendering of a legal, given right. Even though the contract states one thing, if the insurer has accepted something other than what is written, a claim cannot be denied based upon the technicality.
Estoppel
Estoppel means the legal impediment to denying the consequences of one's actions or deeds if they lead to detrimental actions by another.
Parol Evidence Rule
The parol evidence rule states that when parties put their agreement in writing all previous verbal statements come together in that writing, and a written contract cannot be changed or modified by parol (oral) evidence.
Void and Voidable Contracts
Fraud + Prior Knowledge = Void Contract...
...and a void contract is one that is not enforceable by law.
With life insurance policies, insurers typically have two years from the date of contract purchase to dispute the validity of a contract.
In contrast, a voidable contract is one in which one of the parties has a legally satisfactory reason to reject or cancel the contract.
Brett took out a life insurance policy on his son, Steven, when Steven was 14 years old with the idea of locking in rates that Steven would be able to afford when he became an adult. However, when Steven reached the age of 23, he suffered a financial loss leaving him unable to continue the payments. Since he didn't want to ask his father for help, he just stopped making payments. The insurer then had the legal right to void or terminate the contract.
Fraud
If fraud is discovered after an insurance contract has been in force for two years, it cannot be contested and any otherwise legitimate claims cannot be denied based on fraud, misrepresentation, or concealment.
