If a prospective insured conceals a pre-existing heart condition and a policy is issued, upon discovery the company will

• A. Cancel the policy
• B. Continue coverage but exclude the heart condition
• C. Pay all future medical bills
• D. Increase the deductible

Answer: (B)

Concealment of a material pre-existing condition on an application is a misrepresentation that changes how coverage applies, not a blanket requirement to cancel the entire contract. In many medical expense policies, the insurer can keep the policy in force but carve out a rider excluding the misrepresented condition. So the policy would still cover other medical expenses, but treatment for the heart condition would be excluded from benefits. This reflects a practical balance: the insurer acknowledges the misrepresentation by limiting liability for that specific condition, while still providing coverage for everything else.

Other outcomes aren’t the standard remedy here. Cancelling the policy could occur in some fraud or contested cases, but the typical approach in this context is to continue coverage with a pre-existing-condition exclusion. Paying all future medical bills isn’t warranted since the misrepresented condition isn’t covered, and simply increasing the deductible doesn’t address the misrepresentation or limit benefits for the excluded condition.