Washington Life Producer Practice Exam

Under which circumstances may the insurer contest a claim under a life insurance policy?

1. For non-payment of premiums

2. If the insured dies within the contestability period

3. When the insured changes employment

4. During the initial application review

The correct answer is: If the insured dies within the contestability period

The insurer may contest a claim under a life insurance policy if the insured dies within the contestability period. This period, typically the first two years after the policy is issued, allows the insurer to investigate any discrepancies or misrepresentations made during the application process. The rationale behind this is to prevent fraud and ensure that the underwriting process was based on accurate information. During this time, if the insurer discovers inconsistencies or undisclosed information that would have influenced their decision to issue the policy, they have the right to deny the claim. Other options, while related to the insurance process, do not grant the insurer grounds to contest a claim in the same way. For example, non-payment of premiums generally leads to a policy lapse rather than contesting a claim, and changing employment does not affect the validity of a life insurance policy. Additionally, the initial application review occurs before the policy is issued, whereas contestability pertains specifically to claims made during the coverage period.