Definition - What does Voidable Contract mean?
A voidable contract, in the context of insurance, is a valid insurance contract that can be rendered void. In contrast to a void contract, it has the same legal effect and force as a valid contract.
Insuranceopedia explains Voidable Contract
Insurance contracts are often voidable to protect the insurer. Insurance companies may repudiate a policy if the insured fails to pay their premiums, becomes a higher risk, or is found to have lied on their application. Similarly, a policyholder could also stop paying, thereby failing to meet the terms of the contract and voiding it. Other reasons that could make a contract voidable include the following:
- Non-disclosure of one or more material facts
- Misrepresentation or fraud
- Mistake on both sides i.e., a mutual mistake
- Lack of free will of a contracting party or undue influence
- One party's legal incapacity to enter a contract
How Well Do You Know Your Life Insurance?
The more you know about life insurance, the better prepared you are to find the best coverage for you.
Whether you're just starting to look into life insurance coverage or you've carried a policy for years, there's always something to learn.