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 specific period, usually two years. This provision is known as the:
- AMisstatement of Age or Sex Clause
- BIncontestability Clause
- CEntire Contract Clause
- DFree-Look Provision
Show answer & explanationAnswer & explanation
Correct answer: B. Incontestability Clause
The incontestability clause prevents the insurer from denying a claim due to misstatements or concealment in the application after the policy has been in force for a specified period (typically two years), except for non-payment of premiums.
Why the other options are wrong
- A. The Misstatement of Age or Sex Clause allows the insurer to adjust benefits if the insured's age or sex was misstated, rather than voiding the policy.
- C. The Entire Contract Clause states that the policy document and the application constitute the entire agreement.
- D. The Free-Look Provision allows the policyowner to review the policy for a short period (e.g., 10 days) and return it for a full refund.
Incontestability Clause
A standard life insurance policy provision that prevents the insurer from denying a claim based on misstatements or concealment in the application after the policy has been in force for a specified period, typically two years, except for non-payment of premiums.
- Protects beneficiaries from claims being denied years later.
- Usually a 2-year period from policy issue date.
- Does not apply to non-payment of premiums or lack of insurable interest (in some states).
- Does not apply to fraud in some states, but Texas law generally makes it incontestable after 2 years even for fraud.
Memory trick: After two years, the policy is ironclad, no more arguments to be had.