Final answer:
An insurer may contest a life insurance policy during the first two years for false information or unpaid premiums, but not for the policyholder's death within that time or if the policyholder cancels the policy.
Step-by-step explanation:
An insurer may contest the validity of a life insurance policy if the policyholder provided false information on the application or if the policyholder failed to pay the premiums. These reasons allow the insurer to investigate and possibly declare the policy void within a specific period, often referred to as the contestability period, which typically lasts for the first two years of the policy's inception. However, the death of the policyholder within the first two years, while it may trigger a review, is not a reason for contesting the validity of the policy, provided that all other aspects of the application and premium payments were accurate and up to date. Furthermore, if the policyholder cancels the policy, this action cannot retroactively invalidate the policy; it merely terminates the contract moving forward.