Pam states, on her application to Quality Insurance, Inc. for a life insurance policy, that she has not been hospitalized briefly. One year later, Pam dies from a cause unrelated to the earlier hospitalization. Quality denies payment. If Pam's beneficiary sues Quality, the beneficiary will
a. lose, because Pam's misstatement concerned a material fact.
b. lose, because an insurer can use any misstatement on an application to avoid payment.
c. win, because an insurer cannot use a misstatement on an application to avoid payment.
d. win, because Pam's misstatements did not concern a material fact.
Answer: D
Business Law
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