If a policy is contested, during which period can the insurer investigate the claims?

In life insurance, if a policy is contested due to potential misrepresentation or fraud, the insurer typically has a specific period during which they can investigate claims. This period is often referred to as the "contestability period."

The correct answer indicates that this contestability period generally lasts for the first two years of the policy. During these initial two years, insurers are allowed to scrutinize claims to ensure that all information provided at the time of application was accurate and truthful. If they find any discrepancies or violations of terms, they may deny a claim based on that investigation.

After this two-year period, the policy becomes more difficult for insurers to contest. Generally, claims cannot be challenged if the policyholder has been honest about material facts—unless there is clear evidence of fraud. This two-year timeframe strikes a balance between allowing insurers the ability to verify the information provided by applicants while also providing policyholders with a level of security knowing that their claims are protected after this period concludes.