A life insurance policy can usually be contested by the insurer only during which period?

A life insurance policy can typically be contested by the insurer during the first two years of the policy term. This period is known as the contestability period.

The reasoning behind the contestability period is to provide some degree of protection for policyholders. During this time, the insurer has the right to investigate the accuracy and completeness of the information provided by the insured on their application. If material misrepresentations or omissions are discovered during this period, the insurer may deny a claim or rescind the policy.

After this two-year period has elapsed, the insurer's ability to contest the policy becomes significantly limited. Generally, claims cannot be denied based on the misstatements made in the application, except in cases of outright fraud. This policy design ensures that once an insured has maintained the policy for a sufficient duration, they have more security in their coverage without the fear of being denied benefits for non-disclosure or errors that were not intentionally deceptive.

Thus, the correct answer aligns with standard practice in life insurance, emphasizing the importance of the two-year contestability period in protecting policyholders while also allowing insurers to verify the legitimacy of claims.