Which of the following is not a valid reason for an insurer to contest a life insurance policy

Clear communication is important when it comes to your life insurance policy. Life insurance policyholders should inform their primary beneficiaries, as well as their contingent beneficiaries, about the existence of a life insurance policy that names them. If there are valid reasons not to inform the beneficiaries—if, for example, they are young children—it is a good idea to provide this information to the executor of your estate.

When informing beneficiaries and/or an estate executor that a life insurance policy exists, give them the name of the company, the policy number and, ideally, tell them what they intend the life policy’s proceeds to be used for.

Life insurers keep track of their policyholders

No life insurer can stay in business for very long if it develops a reputation for ignoring or not paying legitimate claims. Life insurers prioritize honoring their moral and contractual obligations and have paid out $1.1 trillion to the rightful beneficiaries of individual life insurance policies over the past two decades.
However, there are times when an insured person dies and no one notifies the life insurer or initiates a claim. Fortunately, advances in technology have allowed insurers to create new processes to reduce the number of instances in which this occurs. Life insurers have begun using the U.S. Social Security Administration’s Death Master File as well as other search technologies to determine if a person insured under an individual life insurance policy has died; if they can confirm the death, the insurer will initiate a search for their beneficiaries.
Retroactive application of these state-of-the-art search methods is for some companies time-consuming, expensive and not a process accounted for in the original life insurance policy contract. Forcing insurers to retroactively change the terms of the contract is a “slippery slope” that can potentially put all insurance contracts at risk.

Beneficiaries have ways to track down unclaimed policies

If a loved one dies, and you’re unsure about whether they purchased a life insurance policy, there are ways to find out if they did. The Insurance Information Institute, the American Council of Life Insurers and state Insurance Department websites offer consumer tips on finding unclaimed life insurance policies.
Because it is vital that a life insurance policy remain in-force if at all possible, there are policies that include a mechanism to ensure the policy is not canceled even if the policyholder misses a premium payment. In cases such as these, the life insurer pays the premium out of monies that have accumulated in what is known as the “cash value account” of a permanent life insurance policy. This is an important consumer protection. It prevents a policy from lapsing if the policyholder is unable to pay their premium due to a job loss or if the bill was lost due to either a move or even a prolonged vacation. This feature is not used after the death of a policyholder.
If the insured person dies, the rightful beneficiaries of their life insurance policy are able to receive the policy’s proceeds so long as the policy was in-force at the time of the insured’s death.

Unclaimed life insurance policies are turned over to state government

Life insurers do not keep unclaimed life insurance policies in their possession indefinitely. Unclaimed life insurance policy proceeds are turned over to the state in which the insured is last known to have resided (often with interest) after a certain number of years have passed, following state laws on unclaimed property.

Cancellations and Non-Renewals

Cancellations

Under the present law in New York State, an insurance company may generally cancel your homeowners or tenants policy by issuing a cancellation notice during the first 60 days it is in effect as long as the cancellation notice states the specific reason or reasons for the cancellation.

After your policy has been in effect for 60 days it may not be cancelled or non-renewed for a three-year period, except generally for the following reasons:

• nonpayment of premium (however, if payment is received by the company within 15 days of the mailing of the cancellation notice the policy will not be cancelled);
• conviction of a crime arising out of acts increasing the hazard insured against;
• discovery of fraud or material misrepresentation in obtaining the policy or in the presentation of a claim under the policy;
• discovery of willful or reckless acts or omissions increasing the hazard insured against;
• physical changes in the property occurring after issuance or last annual anniversary date of the policy which result in the property becoming uninsurable in accordance with the insurance company’s objective, uniformly applied underwriting standards in effect at the time the policy was issued or last voluntarily renewed; or
• a determination by the Superintendent that the continuation of the policy would violate or would place the insurer in violation of the Insurance Law.

At the end of this three-year period, your company may refuse to renew your policy.

By law, any notice of nonrenewal must be provided at least 45 days, but not more than 60 days, prior to the expiration date of the policy.

Non-Renewal

A homeowners insurance policy is purchased to cover sudden and unexpected large losses. Homeowners should be careful about filing multiple small claims over a short period of time, as some carriers have restrictions on the number of claims you can file before you are designated a higher risk customer, which may result in your homeowners policy being non-renewed.

The decision to file a claim for damage or a loss that is covered under your policy is up to you, but when it comes to minor damage you may want to consider paying for repairs out-of-pocket.

Tips for Avoiding Non-renewal

Consider carrying a higher deductible. This will save you money on your premium and discourage you from filing multiple small claims.

Perform regular home maintenance. Preventing damage from typical in-home mishaps that can be easily avoided may save you from future risk.

Learn your home's claims history. If you are buying an existing home, find out what claims have been filed in recent years. Water loss claims, for example, can impact whether the property is considered higher risk. Before purchasing a property, you can request that the current owner of the property order a Comprehensive Loss Underwriting Exchange or CLUE report. A CLUE report is generated by a claims history database managed by LexisNexis® and enables insurance companies to access consumer claims information when they are underwriting or rating an insurance policy.

If Your Homeowners Policy is Non-Renewed

There is a difference between cancellation and non-renewal. An insurer cannot cancel a policy that has been in force for more than 60 days except:

• If you fail to pay the premium.
• If you have committed fraud or made serious misrepresentations on your application.

Non-renewal is a different matter. Either you or your insurance company can decide not to renew the policy when it expires. In New York, an insurance company must give you 45 – 60 days notice and explain the reason for non-renewal before it drops your policy. If you want a further explanation, call the insurance company. If you think the reason for non-renewal is unfair, you can file a complaint with the Department of Financial Services.
Your company may have decided to drop a particular line of insurance or to write fewer policies where you live, so you shouldn't necessarily think the non-renewal is because of something you did. On the other hand, if you did do something that raised the insurance company's risk considerably, like committing fraud, your policy may not be renewed.

If your insurance company did not renew your policy, you will not necessarily be charged a higher premium at another insurance company.

What would cause a life insurance policy to be denied?

Which cases is likely to be declined by a life insurer?