New York Insurance Exam Practice Question

Correct Answer: A

Rationale: The incontestability clause serves to protect policyholders by limiting the time frame within which an insurer can contest a claim due to misrepresentation, typically two years. This ensures that after this period, the insurer cannot deny a claim based on statements made during the application process, fostering trust and stability for the insured.

Option B is incorrect as the clause does not grant insurers the right to cancel policies at any time; cancellation is governed by other policy terms. Option C is misleading since the clause does not guarantee premium refunds; it focuses on the validity of the policy. Option D is also incorrect, as the clause does not pertain to waiving premium payments during disability, which may be addressed in different policy provisions.