Florida 2-15 Life, Health and Variable Annuity AgentFlorida Laws and Regulations Specific to Health InsuranceHard
A Florida health insurance policy contains a provision that states if the insurer does not contest the validity of the policy for two years from its issue date, it cannot later deny claims or void the policy based on misstatements in the application, except for fraudulent misstatements. This provision is known as the:
- AGrace Period
- BIncontestable Clause
- CEntire Contract Clause
- DReinstatement Clause
Show answer & explanationAnswer & explanation
Correct answer: B. Incontestable Clause
The Incontestable Clause prevents an insurer from denying a claim or voiding a policy due to misstatements on the application after a specified period (typically two years), except in cases of fraudulent misstatements. This protects the insured from later challenges.
Why the other options are wrong
- A. Grace Period allows a policy to remain in force for a short time after a premium is due.
- C. The Entire Contract Clause states that the policy document and the application constitute the entire contract, preventing external documents from altering it.
- D. Reinstatement Clause outlines the conditions under which a lapsed policy can be restored.
Incontestable Clause (Health Insurance)
A provision in a health insurance policy that prohibits the insurer from denying claims or voiding the policy due to misstatements in the application after a specified period, except for fraudulent misstatements.
- Typically a two-year period.
- Protects the insured from later challenges to policy validity.
- Fraudulent misstatements are always an exception.
- Differs slightly from life insurance version regarding fraud.
Memory trick: Incontestable means your policy is a stable, unchallengeable fable.