Question

An insured has a health insurance policy that has been in effect beyond the incontestable period. A fraudulent statement was made in the application. This statement would normally void the policy, but now it is beyond the incontestable period. If the policy is not guaranteed renewable, what amount will the company have to pay?

A) 66% of claim.
B) 50% of the claim.
C) 80% of claim.
D) Nothing.

Answer 1

After the incontestable period of a health insurance policy, the insurer must pay the full amount of the claim even if there was a fraudulent statement in the application, assuming the policy terms are met and the claim is legitimate.

Step-by-step explanation:

When an insured has a health insurance policy that has been in effect beyond the incontestable period, even if a fraudulent statement was made during the application, the policy cannot be voided after this period has passed. For policies that are not guaranteed renewable, if a claim arises, the insurance company will typically be obligated to cover the claim as per the policy terms. The incontestable clause means that the insurer cannot contest the policy's validity due to misstatements after a certain period, generally two years. Therefore, if a claim is made on such a policy, the insurance company is obligated to pay the full amount of the claim, assuming all other conditions of the policy are met and the claim is legitimate.