Which statement about the contestability period of a life insurance policy is true?

Which statement about the contestability period of a life insurance policy is true?

• A. The policy can be contested only if misstatement of age occurs
• B. The policy can be contested by the insurer only during the first two years of the contract
• C. The policy can be contested by the insured at any time
• D. The policy cannot be contested after issue

Answer: (B)

The key idea here is the contestability period: a life policy can be challenged by the insurer for misstatements or omissions on the application only during a defined timeframe, typically two years from issue. During that window, the insurer may contest coverage or deny a claim based on incorrect or misleading information. Once that period ends, the policy is generally incontestable, meaning the insurer cannot void the policy or deny a claim for misstatements in the application, with exceptions (such as fraud or nonpayment of premiums) depending on state law and the policy terms. Therefore, the true statement is that the insurer can contest the policy only during the first two years of the contract. The other options are not accurate: misstatements aren’t limited to age alone, the insured doesn’t contest the policy (the insurer does), and while the policy becomes incontestable after the period, there are exceptions (e.g., fraud) that can still allow contest within certain bounds.

The key idea here is the contestability period: a life policy can be challenged by the insurer for misstatements or omissions on the application only during a defined timeframe, typically two years from issue. During that window, the insurer may contest coverage or deny a claim based on incorrect or misleading information. Once that period ends, the policy is generally incontestable, meaning the insurer cannot void the policy or deny a claim for misstatements in the application, with exceptions (such as fraud or nonpayment of premiums) depending on state law and the policy terms.

Therefore, the true statement is that the insurer can contest the policy only during the first two years of the contract. The other options are not accurate: misstatements aren’t limited to age alone, the insured doesn’t contest the policy (the insurer does), and while the policy becomes incontestable after the period, there are exceptions (e.g., fraud) that can still allow contest within certain bounds.