Which of the following is true about a Contestable Clause after the first two years?

The Contestable Clause in life insurance policies is an important provision that allows insurers to contest a claim under certain circumstances. After the first two years of the policy, the insurer typically cannot contest the policy based on misrepresentations made by the policyholder, except in cases of fraud.

The correct answer highlights that fraud remains contestable only for individual health insurers, which reflects the legal understanding that if a policyholder commits fraud when obtaining the policy, the insurer retains the right to void the policy and deny any claims based on that fraudulent behavior. This means that even after the contestability period of two years, if the insurer can prove that the policyholder engaged in fraudulent activities—such as intentionally misrepresenting their health status at the time of application—they can refuse to pay the claim.

Understanding the distinction between honest mistakes and fraudulent actions is crucial in this context. While honest mistakes may not be contestable after the two-year period, any fraudulent misrepresentation creates a different standard that allows the insurer to contest the claim.

The other options do not accurately reflect the nuances of the Contestable Clause after two years. For instance, the idea that all claims can be contested regardless of the reason after two years contradicts the general protections offered to policyholders against arbitrary denial