State RegulationsAZ specificDifficulty 3/5
An Arizona insurer discovers, three years after issue, that the applicant gave materially false answers on the life application. What may the insurer do?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
A.R.S. 20-1204 bars contest after the policy has been in force for 2 years from issue, except for nonpayment of premiums. A material misrepresentation discovered after the window cannot reopen the policy, because Arizona's life incontestability clause contains no open-ended fraud exception keyed to the date of discovery. The two-year clock runs from issue, and it is final.
Why the other options are wrong
- A) rescission after the 2-year window contradicts the incontestability rule.
- C) the statute keys the window to time from issue, not from discovery.
- D) proportional reduction is the remedy for age misstatement under A.R.S. 20-1206, and it is not a contest of the policy's validity.
Memory hook
Found it in year three? Too late.