Arkansas Life and Health Insurance Practice Exam

Which provision in a life insurance policy ensures that the policy cannot be voided by the insurer after a specified period, except for non-payment of premiums?

1. Incontestability Clause

2. Suicide Clause

3. Free-Look Period

4. Grace Period

The correct answer is: Incontestability Clause

The correct answer is the Incontestability Clause. This clause ensures that the insurance company cannot void the policy after a specified period of time, typically two years, unless there is evidence of fraud or misrepresentation. The Incontestability Clause provides the policyholder with the assurance that once this timeframe has passed, the policy cannot be cancelled by the insurer based on information that was not disclosed at the time of application. The other options are as follows: - Suicide Clause: This clause states that the insurer will not pay the death benefit if the insured commits suicide within a specific period after the policy is issued. - Free-Look Period: This is a period of time, typically 10-30 days, during which the policyholder has the right to review the policy, and if they decide to cancel, they can receive a full refund of premiums paid. - Grace Period: This is the period after the premium due date during which the policyholder can still make the premium payment without the policy lapsing.