Question

Unless it is regarding fraud, which of the following statements about the contestability of a life insurance policy is true?

a) The insurer can contest the policy at any time
b) The contestability period is typically 5 years
c) The contestability period is typically 10 years
d) The insurer cannot contest the policy after the first 2 years

Answer 1

The correct statement regarding the contestability of a life insurance policy unless it is regarding fraud is that the contestability period is typically 2 years (answer d).

Step-by-step explanation:

The correct statement regarding the contestability of a life insurance policy unless it is regarding fraud is that the contestability period is typically 2 years (answer d).

During this period, the insurer has the right to contest the policy based on any material misrepresentations or omissions made by the policyholder. After the contestability period has passed, the insurer cannot contest the policy, except in cases of fraud.

For example, if a policyholder fails to disclose a pre-existing health condition during the first two years of the policy, the insurer may contest the policy and deny a claim based on that non-disclosure.