California Life-Only & Accident and Health AgentLife InsuranceEasy
A life insurance policyowner is reviewing their policy and notices a clause that states the insurer cannot contest the validity of the policy due to misstatements made in the application after the policy has been in force for a specific period, usually two years. What is this clause commonly known as?
- AIncontestability Clause
- BReinstatement Provision
- CGrace Period Provision
- DEntire Contract Provision
Show answer & explanationAnswer & explanation
Correct answer: A. Incontestability Clause
The incontestability clause prevents the insurer from denying a claim due to misstatements in the application after a certain period, typically two years. This protects the policyowner from claims being denied after a significant time has passed.
Why the other options are wrong
- B. The reinstatement provision allows a lapsed policy to be restored under certain conditions.
- C. The grace period allows the policyowner extra time to pay premiums before the policy lapses.
- D. The entire contract provision states that the policy document and the application constitute the entire agreement.
Incontestability Clause
A provision in a life insurance policy that prevents the insurer from denying a claim due to misstatements in the application after the policy has been in force for a specific period, typically two years.
- Protects the policyowner from rescission after a set time.
- Usually applies after two years from policy issue date.
- Does not apply to non-payment of premiums or lack of insurable interest.
Memory trick: Incontestable means the insurer can't fight it after a while.