A person suffering from cancer did not disclose this facts while taking a life insurance policy.Name the principle he/she violated and explain it in about 50 words.
Arijit, it is the principle of utmost good faith that has been violated in the above scenario. Faith forms the basis of a contract of insurance. Let's suppose that the person who is suffering from cancer takes-up the insurance policy without intimating the insurance company about his health conditions. At the later stages, the company comes to know about the truth (when he is hospitalised or during the preliminary medical tests), then the insurance is forfeited. This is because the person has breached the contract. Similarly, the insurance company must disclose all the hidden costs and terms and conditions to the person at the time of signing the insurance, else the contract will stand useless at the later stage. Thus, both the insurer and the insured should have faith in each other and in the contract signed by them.