State RegulationsGA specificDifficulty 2/5
A Georgia life insurer discovers, just over two years after issue, that the insured materially misstated his health history on the application. All premiums were paid and no fraud is alleged. What may the insurer do?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under O.C.G.A. § 33-25-3, a life policy is incontestable after two years from issue during the insured's lifetime, except for nonpayment of premiums. Just over two years in, with premiums paid and no fraud alleged, the insurer can no longer contest the policy on the ground of misstatements in the application, so the claim must be evaluated on its merits.
Why the other options are wrong
- A) Rescission is unavailable once the two-year contestable period has run.
- B) Denying the claim for the misstatement violates the incontestability limit of O.C.G.A. § 33-25-3.
- D) Georgia law provides no mechanism for reducing the death benefit to reprice the risk after the contestable period.
Memory hook
Two years and the book closes — unless premiums stop.