New York Insurance Exam Practice Question
What is the purpose of a policy's incontestability clause?
Correct Answer: B
Rationale: The incontestability clause serves to limit the insurer's ability to contest claims after a specified period, typically two years. This provides policyholders with peace of mind, knowing that their claims cannot be denied based on misstatements or omissions made during the application process after this timeframe.
Option A, waiving premiums, is incorrect as the clause does not address premium payments. Option C, increasing the death benefit, is not relevant; the clause does not alter benefit amounts. Option D, canceling the policy, misrepresents the clause's purpose, as it does not provide grounds for termination but rather protects the policyholder's rights.
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