Life & Health Insurance Exam (National Portion)Policy Provisions, Options, and RidersMedium
A client has an individual health insurance policy that contains a 'Time Limit on Certain Defenses' provision. If the client intentionally misrepresented material information on their application, how long does the insurer typically have to deny a claim or void the policy based on this misrepresentation?
- A2 years from the policy effective date
- B1 year from the policy effective date
- C3 years from the policy effective date
- DNo limit, as intentional misrepresentation voids the policy immediately
Show answer & explanationAnswer & explanation
Correct answer: A. 2 years from the policy effective date
The 'Time Limit on Certain Defenses' provision, typically 2 years, prevents an insurer from denying a claim or voiding a policy due to misstatements in the application after this period, unless the misstatement was fraudulent. For fraudulent misstatements, the typical time limit is also 2 years, but some states allow denial at any time if fraud is proven.
Why the other options are wrong
- B. This is incorrect; the standard limit is typically 2 years.
- C. This is incorrect; the standard limit is typically 2 years.
- D. While intentional misrepresentation (fraud) is serious, most states still impose a time limit, usually 2 years, after which the insurer cannot void the policy, even for fraud. This protects policyholders from indefinite uncertainty.
Time Limit on Certain Defenses (Health Insurance)
A mandatory uniform provision in health insurance policies that limits the period (typically 2 years) during which an insurer can deny a claim or void a policy due to misstatements in the application, even if fraudulent.
- Mandatory health insurance provision.
- Standard limit is 2 years from policy issue.
- Applies to misstatements, including fraudulent ones.
- Protects insureds from indefinite policy contestability.
Memory trick: Health Policies have a Time Limit to Defend Against Old Lies.