Time Limit on Certain Defenses/Incontestable: which statement is true?

• A. After two years from issue or reinstatement, the insurer cannot deny or reduce a claim based on a material misrepresentation (unless fraudulent misstatement).
• B. After two years, the insurer can deny or reduce a claim for any reason.
• C. The time limit applies only to policies issued after a certain year and not to reinstatements.
• D. The limit applies to fraud only and not to misrepresentation.

Answer: (A)

The key idea is the incontestability rule: once a health policy has been in force for two years after issue or reinstatement, the insurer cannot deny or reduce a claim based on a misrepresentation in the application, as long as the misstatement is not fraudulent. This two-year period protects the insured by preventing late disputes over statements that were made when underwriting the policy. If the misrepresentation is fraudulent, the insurer can still contest the claim even after two years. The clock starts at issue and, if the policy is reinstated, from the reinstatement date, so a new two-year period applies then.