A producer wants to backdate a Pennsylvania life policy to help the applicant secure a lower age-based premium. Under the prohibited-provisions rule of 40 P.S. § 511, how far back may the policy's effective date be set relative to the original application?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
40 P.S. § 511 prohibits any Pennsylvania life policy from taking effect more than six months before the original application was made. Backdating is therefore a bounded tool, not an open invitation: producers may save an applicant a premium class only within the six-month window, and the prohibited-provisions statute draws a hard line beyond it. The same section of the Insurance Company Law also bars other contractual tricks, such as forfeiting a policy for failure to repay a policy loan while the indebtedness is less than the cash value and limiting legal actions to less than two years.
Why the other options are wrong
- A) One month understates the statutory allowance; 40 P.S. § 511 permits an effective date up to six months before the original application.
- C) One year exceeds the ceiling; an effective date more than six months before the application is expressly prohibited.
- D) Two years is the life incontestability period of 40 P.S. § 510(c), a completely different measure from the six-month backdating cap.
Memory hook
Backdate at most six months — past that, the effective date is fiction.