Your Duty of Disclosure
A life insurance policy is simply a written contract between you and the nominated insurer. You have a responsibility under the Insurance Contracts Act 1984, to disclose every bit of information that you know, or could reasonably be expected to know, that is going to be relevant to the insurer, when they assess your request for insurance.
If you fail to disclose all relevant information to the insurer at the time of your policy request and the insurer would not have entered into the contract on any terms if the failure had not occurred, then the insurer may avoid the contract within three years of entering into it. If your non-disclosure is fraudulent, the insurer may elect to avoid the contract at any time from the actual policy start date.
An insurer who is entitled to avoid a contract of insurance may, within three years of entering into it, elect not to avoid it but to reduce the Sum Insured in accordance with a formula that takes into account the benefit amount that would have been payable if you had disclosed all relevant details to the insurer before your policy had commenced.