What is the effect of an incontestability clause?

Question

Quizplus · Accepted Answer

An incontestability clause is a provision in an insurance policy stating that after a specified period of time, typically two years, the insurer cannot challenge the information in the application, except for non-payment of premiums. This protects the insured from having their policy voided due to innocent mistakes or omissions on the application, and provides them with certainty that their coverage will remain in force after the contestability period has expired. Option A is incorrect because it refers to a time limitation on filing a claim, which is not related to the incontestability clause. Option C is incorrect because it implies that the insured is waiving their right to challenge misrepresentations made by their agent, which is not the case. Option D is incorrect because it suggests that the state has no authority to regulate insurer practices, which is not true. Option E is incorrect because it describes a different type of provision, namely a grace period for premium payments.

What Is the Effect of an Incontestability Clause