What will the insurer pay to the beneficiary if a scuba diver dies in an accident after initially answering “No” to scuba diving on their insurance application?

The insurer will pay nothing to the beneficiary due to the exclusion clause if the scuba diver dies in an accident after initially answering “No” to scuba diving on their insurance application. This situation typically involves a material misrepresentation. When the insured does not disclose a high-risk activity, such as scuba diving, and this omission contributes to the cause of death, it can void the contract or lead to the application of the exclusion clause. Insurers often specify certain activities that pose higher risks, and the insured must be truthful about their involvement in these activities for the policy to remain valid in the event of a claim.

Choosing an amount minus any outstanding policy loans overlooks these critical contractual stipulations, as all payouts are contingent on the legitimacy of the policy terms at the time of the claim. Thus, if the diver's death is linked to the undisclosed activity, the insurer has grounds to deny the claim.