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Material Facts

Material facts are the pieces of information that are essential for an insurer to accurately assess risk and decide whether to approve an application, determine premiums, or apply exclusions. These facts include any details that could influence the insurer’s decision to issue coverage or the terms of that coverage. Examples include medical conditions, medications, family health history, lifestyle habits, and participation in hazardous activities.

How It Works

A fact is material when knowledge of it would cause a hypothetical reasonable insurer to either refuse the coverage or raise the premium the insured has to pay. Because an insurance contract is one of utmost good faith, the facts material to the risk are usually known fully only by the insured, so the insurer must rely on the insured's answers. That is why, when applying for health, life, or disability insurance, applicants are legally required to disclose all material facts truthfully and completely. The duty applies both at the formation of the contract and throughout its existence, including when an insured makes a material change to coverage. Where an applicant fails to disclose a material fact within their knowledge, the policy may be rendered voidable by the insurer, and if the insurer voids the policy it can treat it as if it had never been in force, provided it returns all premiums to the insured.

Example:

Suppose a Canadian applies for life or disability insurance and does not disclose a recent diagnosis of high blood pressure. That omission is a failure to disclose a material fact. If a claim later arises from a related condition within the contestability period, the insurer may deny the benefit or void the policy.

What to Watch For:

Pay close attention to timing. A two-year contestability provision lets an insurer rescind a life policy within the first two years on evidence of material misrepresentation alone, and even after two years it can rescind the policy or deny a claim where the failure to disclose was fraudulent and material to the risk. Because the standard is whether a reasonable insurer would have refused coverage or charged more, and because the facts material to the risk are usually known fully only by the insured, applicants are required to disclose every fact within their knowledge that is material to the insurance.

Related Terms

Misstatement of Age

Misstatement of age occurs when the age of the insured person is recorded incorrectly on an insurance application or policy. Because age is a key factor in determining eligibility, premiums, and benefit amounts, any error - whether accidental or intentional - can affect the terms of coverage. The misstatement may be discovered during underwriting, at the time of a claim, or during a policy review.

Member

A member is an individual who is enrolled and covered under a group insurance plan, typically through their employer, association, or organization. The member is often referred to as the insured employee or plan participant and receives coverage for benefits such as health, dental, life, and disability insurance. The member may also extend coverage to eligible dependents, such as a spouse or children, under the same plan.

Benefit Survival Period

A benefit survival period is the minimum amount of time a policyholder must remain alive after being diagnosed with a covered condition before an insurance benefit becomes payable. This period ensures that the illness or injury meets the policy’s criteria for a valid claim and prevents immediate payouts for conditions that result in death shortly after diagnosis.

Group Insurance

Group insurance is a type of coverage that provides benefits to a defined group of people, typically employees of a company or members of an organization, under a single master policy. Instead of each person purchasing an individual policy, the group is insured collectively, which allows members to access broader coverage at lower rates. The employer or organization acts as the contract holder, while individual participants receive a certificate of insurance outlining their specific benefits.

Optional Benefit / Rider / Add-On

An optional benefit, also called a rider or add-on, is an additional feature that can be purchased to enhance your existing health, dental, life, or disability insurance plan. Optional benefits allow you to customize coverage by adding protection that suits your personal needs, rather than relying only on the base plan design.

Relevant Plans

Plans that relate to Material Facts

Alberta Blue Cross - Blue Assured - Basic

Alberta Blue Cross - Blue Assured - Basic

Can apply at anytime, at any age.

Alberta Blue Cross - Blue Assured - Enhanced

Alberta Blue Cross - Blue Assured - Enhanced

Can apply at anytime, at any age.

Alberta Blue Cross - Blue Assured - Enhanced+

Alberta Blue Cross - Blue Assured - Enhanced+

Can apply at anytime, at any age.

Alberta Blue Cross - Blue Assured - Premium

Alberta Blue Cross - Blue Assured - Premium

Can apply at anytime, at any age.

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