South Carolina Life and Health Practice Exam

The correct answer is that a disability policy is incontestable after it has been in force for 2 years under the Time Limit on Certain Defenses Provision. This provision is designed to protect insured individuals from having their claims denied after a specified period due to misstatements or omissions in their application. By establishing a 2-year contestability period, the law allows the insurer a reasonable time to investigate the initial information provided, while also providing the policyholder with assurance that once this period has passed, their coverage is secure, and they can rely on the policy without fear of the insurer contesting it based on the application details.

This time frame reflects a balance between the rights and protections of the insured and the legitimate interests of the insurer. Therefore, after the policy has been in effect for 2 years, the insurer cannot contest claims based on the information provided at the time of application, ensuring that individuals have the necessary stability and assurance in their coverage.