State RegulationsGA specificDifficulty 2/5
An insurer in Georgia discovers a material misstatement in the application of an individual life policy two and a half years after issue; all premiums have been paid. Under O.C.G.A. § 33-25-3, what may the insurer do?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under O.C.G.A. § 33-25-3, an individual life policy becomes incontestable after two years from issue during the insured's lifetime, and the only stated exception is nonpayment of premiums. Because the policy here has been in force beyond two years and premiums were paid, the insurer may not use the application misstatement to contest the policy. The incontestability clause gives beneficiaries certainty after the two-year window closes.
Why the other options are wrong
- A) Rescission for misstatement is barred once the two-year incontestability period has run, absent nonpayment of premium.
- C) Georgia law provides no proportional death-benefit reduction for discovered misstatements after the contestable period.
- D) The beneficiary's knowledge is irrelevant; the statutory test is the two-year incontestability period and the premium-payment exception.
Memory hook
Two years and the misstatement door slams shut — only unpaid premiums reopen it.