The normal rule is that after a specified period of time, insurance companies cannot contest the validity of a life insurance policy for any reason except non-payment of premiums.

a. Do you think this rule encourages people to hide facts from the insurance company until their policy is incontestable? Is it ethical to hide facts that would otherwise invalidate an insurance policy? Support your answer with an example.

b. What do you think is the reason for this rule?

Answer rating: 100% (QA)

a In most life insurance plans an incontestability clause prevents the provider from voiding coverage owing to a misstatement by the insured after a certain length of time has passed A typical inconte... View the full answer