Commonwealth Consolidated Acts

INSURANCE CONTRACTS ACT 1984 - SECT 29

             (1)  This section applies where the person who became the insured under a contract of life insurance upon the contract being entered into:

                     (a)  failed to comply with the duty of disclosure; or

                     (b)  made a misrepresentation to the insurer before the contract was entered into;

but does not apply where:

                     (c)  the insurer would have entered into the contract even if the insured had not failed to comply with the duty of disclosure or had not made the misrepresentation before the contract was entered into; or

                     (d)  the failure or misrepresentation was in respect of the date of birth of one or more of the life insureds.

             (2)  If the failure was fraudulent or the misrepresentation was made fraudulently, the insurer may avoid the contract.

             (3)  If the insurer would not have been prepared to enter into a contract of life insurance with the insured on any terms if the duty of disclosure had been complied with or the misrepresentation had not been made, the insurer may, within 3 years after the contract was entered into, avoid the contract.

             (4)  If the insurer has not avoided the contract, whether under subsection (2) or (3) or otherwise, the insurer may, by notice in writing given to the insured before the expiration of 3 years after the contract was entered into, vary the contract by substituting for the sum insured (including any bonuses) a sum that is not less than the sum ascertained in accordance with the formula

where:

"S" is the number of dollars that is equal to the sum insured (including any bonuses).

"P" is the number of dollars that is equal to the premium that has, or to the sum of the premiums that have, become payable under the contract; and

"Q" is the number of dollars that is equal to the premium, or to the sum of the premiums, that the insurer would have been likely to have charged if the duty of disclosure had been complied with or the misrepresentation had not been made.

             (5)  In the application of subsection (4) in relation to a contract that provides for periodic payments, the sum insured means each such payment (including any bonuses).

             (6)  A variation of a contract under subsection (4) has effect from the time when the contract was entered into.