Misrepresentation in underwriting can lead to which risk?

• A. Improved underwriting terms
• B. No impact
• C. Market risk
• D. Lapse or denial due to misrepresentation

Answer: (D)

When underwriting information is false or incomplete and it’s material to the risk, the insurer cannot rely on that contract. If a material misrepresentation is discovered, the insurer may void the policy or deny a claim because the risk wasn’t accurately assessed in the first place. That makes lapse or denial due to misrepresentation the realistic consequence you should remember.

This isn’t about getting better terms, which misrepresentation would not justify, nor is it about market conditions changing risk in general. It’s specifically about the contract being invalidated or a claim being rejected due to the false information.