Three years after a Pennsylvania life policy was issued, the insurer discovers that the application contained a material misrepresentation about the insured's health. What may the insurer do under 40 P.S. § 510(c)?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
40 P.S. § 510(c) closes the contestability door after two years from issue during the insured's lifetime, with non-payment of premium as the surviving exception. A material health misrepresentation discovered in year three therefore cannot be used to void the policy or defeat the death claim. The only carve-outs the statute contemplates are non-payment of premium and, at the company's option, excepted disability and accidental death benefit provisions. Under the Insurance Company Law the insurer's remedy window is a fixed two years from issue, not a discovery-triggered clock.
Why the other options are wrong
- B) An unlimited fraud exception is not written into 40 P.S. § 510(c); after two years the enumerated exceptions, not a general fraud reservation, control.
- C) The statute sets the bar at two years from issue; there is no three-year window keyed to the insurer's discovery of the misstatement.
- D) Blanket denial of all future claims contradicts the incontestability protection; only premium non-payment and optional benefit exceptions survive the two-year mark.
Memory hook
After two years the application is sealed shut — unpaid premium is the only key.