An insured has an individual health insurance policy that contains a Time Limit on Certain Defenses provision. If the insured intentionally misrepresented a material fact on the application, how long does the insurer typically have to void the policy based on this misrepresentation?
- A2 years from the policy effective date.
- B5 years from the policy effective date.
- CThe insurer can void the policy at any time, even after 2 years, due to intentional fraud.
- D1 year from the policy effective date.
Show answer & explanationAnswer & explanation
Correct answer: C. The insurer can void the policy at any time, even after 2 years, due to intentional fraud.
The Time Limit on Certain Defenses (similar to the Incontestable Clause in life insurance) typically limits the insurer's ability to deny a claim or void a policy due to misstatements on the application after 2 years. However, this time limit does NOT apply in cases of intentional fraud. An insurer can void a policy due to fraudulent misstatements at any time.
Why the other options are wrong
- A. 2 years is the standard limit for non-fraudulent misstatements, but the question specifies *intentional* misrepresentation (fraud).
- B. 5 years is too long and not a standard period for this provision.
- D. 1 year is incorrect; the standard period is 2 years for non-fraudulent misstatements.
Time Limit on Certain Defenses (Health)
A mandatory health insurance provision that limits the period (usually 2 years) during which an insurer can deny a claim or void a policy due to misstatements in the application, except in cases of fraudulent misstatements.
- Similar to Life Insurance's Incontestable Clause.
- Typically a 2-year period.
- After 2 years, policy cannot be voided for non-fraudulent misstatements.
- Fraudulent misstatements are an exception; policy can be voided at any time.
Memory trick: TIME LIMIT: Two Years for Truth, Forever for Fraud.