State RegulationsNC specificDifficulty 2/5
An applicant for a life policy in Greensboro unintentionally gives an incorrect answer in the application. Under G.S. 58-3-10, when may the misstatement avoid the policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under G.S. 58-3-10, statements in the application are representations, not warranties, and a misstatement avoids the policy only if it was fraudulent or material. An innocent, immaterial error does not defeat coverage, which protects North Carolina applicants from forfeiture over honest mistakes.
Why the other options are wrong
- A) Discovery alone is not the test; the misstatement must be fraudulent or material before the policy can be avoided.
- C) The two-year contestability limit in G.S. 58-58-22(2) restricts the insurer's ability to contest; it does not make every early misstatement void.
- D) No such signing-ceremony requirement exists anywhere in the statute.
Memory hook
Representations, not warranties: fraud or materiality, or the policy stands.