In the 1901 case of McMaster v. New York Life Insurance Company, the U.S Supreme Court ruled in favor of the insurance company. The plaintiff, McMaster, had taken out a life insurance policy on his wife and named himself as beneficiary. After his wife's death, he sought to claim benefits from this policy but was denied by the insurer due to misrepresentation and concealment during application process about her health condition which violated terms of contract. The court held that an insured person has a duty to disclose all material facts related to their health when applying for coverage; failure to do so can result in denial of claims or cancellation of policies because it constitutes fraud against insurers who rely on accurate information while assessing risk and determining premiums.

The dissenting opinion in the McMaster v. New York Life Insurance Company case argued that the majority's decision was flawed because it failed to consider important aspects of contract law. The dissent emphasized that an insurance policy is a contract, and as such, its terms should be strictly adhered to by both parties involved. In this case, the insured had violated one of these terms - specifically, he lied about his health condition when applying for coverage. According to traditional principles of contract law, this misrepresentation would render the agreement voidable at the option of the aggrieved party (in this instance, New York Life). Therefore, they believed that New York Life should not have been required to pay out on a policy obtained through deceitful means. They also expressed concern over how ruling otherwise could potentially encourage dishonesty among future applicants seeking insurance coverage.