Question:

A takes a life insurance policy making a false statement about his health and does not disclose the fact that he has been treated for a serious illness. In this case which one of the following statements is correct:

Updated On: Jul 13, 2026
  • The Contract is void
  • The Contract is valid
  • Contract is voidable on the ground of fraud
  • Contract is voidable on the ground of misrepresentation
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The Correct Option is C

Approach Solution - 1

The Correct Option is (C):Contract is voidable on the ground of fraud
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Approach Solution -2

Insurance contracts are contracts of the utmost good faith, and this question tests whether an active false statement about health amounts to fraud or the lesser wrong of misrepresentation under Sections 17 and 18 of the Indian Contract Act.

  1. The Contract is void: a policy obtained through a false statement is not void from the outset, it remains a validly formed contract that the insurer can choose to avoid, which is why the Act calls this category voidable, not void.
  2. The Contract is valid: if this were true, the insurer would have no remedy at all against a policyholder who lied about a serious pre-existing illness, which defeats the entire purpose of requiring good faith disclosure in insurance contracts.
  3. Contract is voidable on the ground of fraud: Section 17 defines fraud to include a suggestion of a fact which the person making it does not believe to be true, made with intent to deceive. Making a false statement about one's health, knowing it to be false, and concealing a serious illness, is a deliberate act intended to induce the insurer to enter the contract on the wrong terms. This is fraud, and Section 19 makes such a contract voidable at the option of the deceived party, here, the insurer.
  4. Contract is voidable on the ground of misrepresentation: misrepresentation under Section 18 covers an innocent, honest belief in a false statement, without intent to deceive. Here, the applicant actively lied and hid a known illness, that is a deliberate deception, not an innocent mistake, so misrepresentation understates what actually happened.

Since the false statement and the concealment were both deliberate, the wrong committed is fraud, and the resulting policy is voidable on that ground.

So, the correct answer is Contract is voidable on the ground of fraud.

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