State RegulationsNY specificDifficulty 3/5
A life insurance policy issued in New York has been in force for more than 2 years, and the insured is still alive. Under N.Y. Ins. Law §3203(a)(3), the insurer may still contest the policy for which reason?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under N.Y. Ins. Law §3203(a)(3), a life policy becomes incontestable after 2 years from the date of issue, during the insured's lifetime. The statute carves out express exceptions: the insurer may still raise nonpayment of premiums and the war-service provision, and at the company's option the total-disability and accidental-death benefit provisions may remain contestable. Premium nonpayment is therefore always available as a defense, even after the contestable period has run.
Why the other options are wrong
- A) Once the policy is incontestable, misstatements about health in the application can no longer be used to contest it; that is precisely what the 2-year limit forecloses.
- C) The suicide exclusion applies only within 2 years of issue; after 2 years the death benefit must be paid.
- D) A change in the insured's residence has no effect on contestability; the policy's terms follow the insured wherever the insured moves.
Memory hook
After 2 years, only premium nonpayment (and the war provision) can still be contested.