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

During the two-year contestability period, the insurer retains the right to challenge claims based on misrepresentation. This period is critical because it allows the insurance company to scrutinize the policy application and the circumstances surrounding the issuance of the policy. If the insurer discovers that the policyholder provided false information or omitted important facts during the application process, it can deny a claim even if the event leading to the claim occurs after the policy is in force.

The two-year contestability period is designed to protect insurers from potentially fraudulent claims that could arise shortly after a policy is purchased. It gives them time to investigate the accuracy of the underwriting information and to ensure that they are adequately assessing and pricing the risk of insuring the individual.

In contrast, insurers generally cannot dispute claims made after this period unless there’s evidence of outright fraud. Thus, this mechanism serves both as a safeguard for insurers and as a way to encourage policyholders to be forthright in their applications.