What is the primary purpose of the 'Incontestability' provision in a life insurance contract?

Question: What is the primary purpose of the 'Incontestability' provision in a life insurance contract?

Answer options:

• The insurer can never cancel the policy for any reason. ✅ The insurer cannot challenge the policy for non-fraudulent misrepresentation after it has been in force for two years.
• The insurer must pay double the death benefit if the death is accidental.
• The beneficiary cannot be changed by the policyowner after two years.

Correct answer: The insurer cannot challenge the policy for non-fraudulent misrepresentation after it has been in force for two years.

Explanation: The 'incontestability' clause states that after a policy has been in force for a certain period (usually two years), the insurer cannot challenge the validity of the contract based on misrepresentation or non-disclosure, unless there is evidence of fraud. This provides security to the policyholder.