When Jorge de Guerrero applied for a $200,000 life insurance policy with John Hancock Mutual Life Insurance Co., he stated on the insurance application that he had not seen a physician within the past five years. In fact, he had had several consultations with his physician, who three weeks prior to the application had diagnosed him as overweight and suffering from goiter. His response to the question on drug and alcohol use was that he was not an alcoholic or user of drugs. In fact, he had been an active alcoholic since age 16 and was a marijuana user. De Guerrero died within the two-year contestability period included in the policy, and John Hancock refused to pay. The beneficiary contended that all premiums were fully paid on the policy and that any misstatements in the application were unintentional. John Hancock contended that if the deceased had given the facts, the policy would not have been issued. Decide. [de Guerrero v John Hancock Mutual Life Ins. Co., 522 So2d 1032 (Fla App)]

CPA QUESTIONS The topic of insurance has been eliminated from the content outline for the CPA exam as of october 2009. However, the exam lags behind the content change, so this topic may continue to appear on the exam for six to 18 months.

AppendixLO1