Sub-health and the Disclosure Obligation under the Insurance Law: From the Question-and-Answer System to the "Explicit Explanation" Standard in Exclusion Clauses

Section 6 Sub-health and Relevant Provisions of Insurance Law The Insurance Law of the People's Republic of China is the regulatory body for commercial insurance relationships. As a group covered by commercial life insurance, the health status of sub-healthy individuals directly affects whether life insurance companies underwrite them and determine premium rates. The core of the relationship between sub-health and insurance law lies in disclosure and explanation. I. Disclosure by the Policyholder Disclosure refers to the oral or written statement made by the policyholder or insured to the insurer at the time of signing the insurance contract. Article 17 of my country's Insurance Law stipulates: "The insurer...may inquire about the relevant circumstances of the insured object or the insured, and the policyholder shall truthfully disclose such information." Regarding the content of disclosure, my country adopts an inquiry-and-response principle (objectivism), meaning that the policyholder only has an obligation to truthfully disclose the questions asked by the insurer. The application form and risk inquiry form designed by the insurer are considered written forms of "inquiry." The matters inquired about usually involve "material facts" related to risk, including the insured's age, gender, occupational risk, past medical history, family medical history, current health status, and bad habits, etc. Breach of the duty of disclosure includes inaccurate disclosure (misstatement) and non-disclosure (concealment and omission). Regarding the consequences of breaching the duty of disclosure, my country adopts a termination policy: if the breach is intentional, the insurer has the right to terminate the contract and will not be liable for any payments or refunds of premiums; if the breach is due to negligence, and if it has a serious impact on the occurrence of the accident, the insurer is not liable but may refund the premiums. In life insurance, good health does not preclude minor ailments. If the insured is unaware of a latent serious illness at the time of application, or if the physician does not find any abnormalities during the medical examination, this cannot be considered a failure to disclose. By learning about the concept of sub-health, sales personnel should improve their professional skills, require customers to disclose information truthfully, and jointly cultivate a trustworthy market.

II. The insurer's obligation to explain the terms of the contract to the insured refers to the insurer's statutory obligation to explain the meaning of the contract terms to the policyholder at the time of contract formation. Articles 17(1) and 18 of my country's Insurance Law stipulate that the insurer shall explain the contents to the policyholder, and shall "clearly explain" the exclusion clauses at the time of contract formation; if not clearly explained, the clause shall be invalid. "Clear explanation" includes both content requirements (explaining the true meaning and legal consequences) and formal requirements (oral or written form). Simply printing a notice on the insurance policy is not considered fulfilling the obligation of clear explanation. The insurer bears the burden of proof regarding whether it has fulfilled its obligation to explain. According to Article 18 of the Insurance Law, failure to fulfill the "clear explanation" will render the exclusion clauses invalid. However, some scholars point out that this may leave the contract's validity uncertain, and if the statutory exclusion clauses are therefore invalid, it contradicts the general binding force of law. In conjunction with the concept of sub-health, the completeness and accuracy of information should be highly valued during the underwriting process. Any inaccuracies should be investigated thoroughly through physical examinations or specialized questionnaires to avoid erroneous underwriting. For exclusions from liability that are not covered by insurance, a professional should visit the client's home to explain the situation, create a written record, and have the client sign it for confirmation, so as to truly meet the legal requirement of "clear explanation".