Question

Which of the following is the time limit on certain defenses after which the policy becomes incontestable?

1) 1 year
2) 2 years
3) 3 years
4) 5 years

Answer 1

The contestability period in insurance policies is typically 2 years. During this time, the insurer can contest a claim for reasons like misrepresentation. After this period, the policy becomes incontestable, securing the beneficiaries' rights to the benefits.

Step-by-step explanation:

The time limit on certain defenses after which the policy becomes incontestable is typically 2 years. This period is commonly referred to as the 'contestability period,' a standard clause in life insurance policies. During this period, the insurance company can contest a claim and refuse to pay out for reasons such as misrepresentation or fraud. After the expiration of this period, however, the policy usually becomes incontestable, meaning the insurer must pay the death benefit even if there was a misstatement or omission on the application for insurance, except in cases of fraud that can be proven.

The contestability period is meant to balance the interests of the insured and the insurance company. It provides the company with a window to verify information and uncover fraud, while also giving the insured the assurance that after a certain period, their beneficiaries will receive the policy benefits.