Under what circumstance can a health insurance policy be rescinded?

A health insurance policy can be rescinded when the insured commits fraud or misrepresentation during the application process. This is grounded in the principle of utmost good faith, which requires both parties in an insurance contract to disclose all relevant information truthfully. If the insurer discovers that the insured has intentionally provided false information or has omitted material facts that would have influenced the insurer's decision to provide coverage, they have the right to void the contract. This helps protect the insurer from having to cover risks that were not accurately disclosed at the time of underwriting.

In contrast, voluntary cancellation of the policy by the insured is simply a choice made by the policyholder and does not constitute grounds for rescission. Non-payment of premiums can lead to the termination of the policy but is not the same as a rescission, which implies that the policy is treated as though it never existed. The insured reaching a certain age generally does not impact the validity of the policy unless specific age-related restrictions were mentioned in the coverage. Therefore, the correct answer highlights the significant legal implications of misrepresentation in insurance agreements.