The duty of utmost good faith in insurance requires full and accurate disclosure of material facts; misrepresentations regarding income and occupation justify the avoidance of insurance policies.

Atan Mustaffa Yussof Ahmad J:

[1] This judgment concerns a life insurance dispute arising from the rejection and avoidance of three insurance policies by an insurer following an early death claim. The case involves the fundamental principles of utmost good faith and material disclosure in insurance contracts, specifically whether the insured person made misrepresentations regarding his income and occupation in the insurance proposal forms

[2] The central issues before this court relate to the burden of proof required to establish non-disclosure of material facts, the honesty and sincerity of the information provided by the Life Assured, and whether the insurer waived its right to rely on the alleged misrepresentations.

[3] The deceased Life Assured had purchased three separate life insurance policies with a total death benefit of RM2,000,000.00, declaring himself as a business person managing a transport business with substantial annual income ranging from RM200,000.00 to RM400,000.00. Following the Life Assured's death from natural causes within months of policy inception, the insurer conducted investigations that allegedly revealed discrepancies between the declared income and occupation versus the Life Assured's actual financial circumstances.

[4] The insurer subsequently rejected all death benefit claims and repudiated the policies, citing material misrepresentations in the proposal forms that breached the duty of utmost good faith. The beneficiaries contested this decision, arguing that the investigation report lacked evidential value, that any discrepancies were not material to the risk, and that the insurer had waived its right to complain about non-disclosure through its conduct.

[5] This case therefore requires the court to examine the delicate balance between an insured's duty to make full and accurate disclosure of material facts and an insurer's reliance on such information in underwriting decisions. The resolution of these issues has significant implications for the insurance industry's practices regarding policy avoidance and the enforceability of death benefit claims

[6] The court must ultimately determine whether the evidence supports the insurer's decision to avoid the policies or whether the beneficiaries are entitled to the substantial death benefits claimed.

Background Facts

[7] The Life Assured, Kumaresan A/L Kovilan, purchased three separate life insurance policies from the Defendant, Great Eastern Life Assurance (Malaysia) Berhad, during the course of 2017. The first Insurance Policy, numbered 102550242-1, commenced on 12 July 2017 with a basic sum assured of RM500,000.00 and a monthly premium of RM500.00. The second Insurance Policy, numbered 102573408-6, commenced on 21 August 2017 with a basic sum assured of RM500,000.00 and a monthly premium of RM540.00. The third Insurance Policy, numbered 102597015-1, commenced on 28 September 2017 with a basic sum assured of RM1,000,000.00 and a monthly premium of RM1,080.00. These policies shall be referred to as "Insurance Policies." The total death benefits across all three Insurance Policies amounted to RM2,000,000.00.

[8] All three insurance proposal forms were completed by the Defendant's agent, Mitesh Kumar A/L Hamendra Kumar. The Life Assured made the requisite premium payments for all three Insurance Policies by transferring funds via Automated Teller Machine using the Malaysian Electronic Payment System (MEPS) Fund Transfer. The premiums were paid regularly from July 2017 through to December 2017, and all three Insurance Policies remained valid and in force during this period.

[9] In the proposal forms for the Insurance Policies, the Life Assured declared his occupation as a business person at Nansu Resources. For the first two Insurance Policies, he stated his annual income as RM200,000.00, whilst for the third Insurance Policy, he declared an annual income of RM400,000.00. The business address provided was Block 7, Flat PKNS, s 16, Shah Alam.

[10] On 18 D