State RegulationsNY specificDifficulty 2/5
A life insured dies 1 year after her New York life policy was issued. During its claim investigation, the insurer discovers a material misrepresentation in the application about the insured's medical history. The insurer may:
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under N.Y. Ins. Law §3203(a)(3), the policy becomes incontestable only after 2 years from the date of issue, during the insured's lifetime. Because the insured died within that period, the policy is not yet incontestable, and the insurer may contest if the misrepresentation was material — though since application statements are representations under §3204, materiality rather than automatic voidance governs.
Why the other options are wrong
- A) Applications contain representations, not warranties, under §3204; nothing is denied automatically.
- B) The policy is not incontestable at delivery; §3203(a)(3) requires 2 years from the date of issue during the insured's lifetime.
- D) The misstatement of age provision of §3203(a)(5) adjusts benefits when age is wrong; a misrepresentation about medical history is a contest matter.
Memory hook
Died before 2 years? The contest door is still open.