South Carolina Life and Health Practice Exam

Under the Time Limit on Certain Defenses Provision, a health insurance policy is incontestable after how many years, other than for fraud?

1. 2 years

2. 1 year

3. 5 years

4. 10 years

The correct answer is: 2 years

The Time Limit on Certain Defenses Provision establishes the period during which an insurer can contest a health insurance policy based on misstatements or omissions made by the policyholder. In most states, including South Carolina, this period is set at two years. After this two-year period, the insurance company cannot contest the validity of the policy, except in cases involving fraud. This provision is designed to provide policyholders with a level of security and certainty regarding their coverage, ensuring that once this time frame has passed, they can rely on the policy without fear of being challenged on misstatements made when applying for the insurance. This two-year limit is a standard practice in the insurance industry, as it balances the insurer's need to investigate and confirm the validity of claims with the policyholder's right to have stable and standalone coverage. It encourages honesty in application processes while also protecting consumers from ongoing scrutiny long after they've entered into the contract, fostering trust in the insurance system.