Under the prohibited-provisions statute 40 P.S. § 511, which contractual term may a Pennsylvania life insurer lawfully include in a policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
40 P.S. § 511 prohibits any provision limiting the time for legal action to less than two years after the cause of action accrues, so an insurer may include the limitation only if it gives policyowners at least two years to sue. The section outlaws the other three choices outright: forfeiture for failure to repay a policy loan while indebtedness remains below cash value, effect dates more than six months before the original application, and settlement provisions that would pay less than the face amount at maturity. The Pennsylvania Insurance Department's outline groups these as the forbidden-terms checklist for life policies under the Insurance Company Law.
Why the other options are wrong
- B) A legal-actions window shorter than two years is exactly what 40 P.S. § 511 forbids; the limitation floor is two years, not below it.
- C) Forfeiture for failing to repay a policy loan while the indebtedness is less than the cash value is an enumerated prohibited provision.
- D) An effective date more than six months before the original application violates the backdating cap of 40 P.S. § 511.
Memory hook
Two years to sue or nothing — shorter lawsuit windows are forbidden terms.