Texas General Lines — Life, Accident, Health and HMOGeneral InsuranceMedium
A life insurance policy states that the insurer cannot contest the validity of the policy, except for non-payment of premiums, after it has been in force for a certain period, usually two years. What is this provision called?
- AGrace Period
- BEntire Contract Provision
- CIncontestability Clause
- DReinstatement Provision
Show answer & explanationAnswer & explanation
Correct answer: C. Incontestability Clause
The incontestability clause prevents an insurer from denying a claim due to misrepresentations or concealment in the application after the policy has been in force for a specific period (typically two years), except for non-payment of premiums.
Why the other options are wrong
- A. A grace period allows a policyowner extra time to pay a premium before the policy lapses.
- B. The entire contract provision states that the policy and application constitute the entire agreement between the parties.
- D. The reinstatement provision allows a lapsed policy to be restored under certain conditions.
Incontestability Clause
A provision in a life insurance policy that prevents the insurer from denying a claim due to statements in the application after the policy has been in force for a specific period (typically two years), except for non-payment of premiums.
- Usually a 2-year period
- Protects policyholders from post-claim investigations
- Does not apply to non-payment of premiums
- Does not apply to lack of insurable interest at inception
Memory trick: Incontestability: After two years, they Can't Contest you.