Chartered Life Underwriter Exam 2025 – 400 Free Practice Questions to Pass the Exam

The contestability period in life insurance is a specified timeframe, typically two years from the policy's issuance, during which the insurer has the right to investigate and contest any claims made due to alleged misrepresentations or omissions in the application for insurance. This period allows the insurer to ensure that the information provided by the insured is accurate, thereby preventing fraud and ensuring fair underwriting practices.

If a claim is filed within this timeframe, the insurer can scrutinize the policyholder's application and can deny the claim if it determines that there was a significant misrepresentation that affected underwriting decisions. This serves to protect insurers from the financial repercussions of fraudulent claims and encourages policyholders to be honest and straightforward in their applications.

The other options do not accurately capture the primary function of the contestability period. Ensuring timely payment of premiums addresses a different aspect of the insurance contract, while providing a time buffer for policyholders and increasing the cash value of the policy are not related to the intent behind the contestability period.