Swalm, who suffered from cystic fibrosis, contacted Dennis, who was authorized by a life insurance company to take applications for its insurance policies, and requested a life insurance policy for $200,000. Dennis provided Swalm with an application form that included a number of questions concerning the applicant’s health, and any existing or prior medical conditions. Dennis reviewed the form with Swalm and his spouse, and his spouse mentioned to Dennis that Swalm suffered from cystic fibrosis, but the condition was under treatment and control by certain drugs. Dennis, acknowledged the comment, but entered a ‘none’ on the form with respect to existing medical conditions for Swalm. Swalm signed the form, and the application was sent to the insurance company. A policy of insurance was then issued to Swalm. Some months later, Swalm’s cystic fibrosis could no longer be controlled by drug treatment, and a year later he died. Swalm’s spouse, as the named beneficiary in the life insurance policy, claimed payment under the policy. When the insurance company discovered the cause of death and Swalm’s medical history, it refused to pay
If Swalm’s spouse took legal action against the insurer, what would be the basis of her claim? What defences might the insurer raise?