The failure of either party to an insurance contract, to reveal to the other, any material fact or circumstance which is known or should be known to either. The offended party may avoid the contract.
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(1) A plan for issuing coverage on substandard risks under which a standard premium is paid, but less than the full face amount of the policy is payable if death occurs within a certain period of years. It is rarely used and is even illegal in some states. (2) A plan under which an impairment of the insurer’s assets if offset by pro rata liens against policies to be deducted from the face amount when paid as a claim.