Which clause protects policyowners from misrepresentation caused by innocent mistakes?

• A. Reinstatement clause
• B. Incontestable clause
• C. Grace period clause
• D. Suicide clause

Answer: (B)

The idea being tested is the incontestable clause. After a policy has been in force for a stated period (usually two years), the insurer generally cannot contest the policy or deny a claim due to innocent misstatements in the application. This protects the policyowner from having coverage voided for honest, nonfraudulent mistakes once the policy has proven its reliability. The insurer can still challenge for fraud, but innocent errors aren’t grounds to void the policy after the incontestable period. The other clauses address different issues: reinstatement covers restoring a lapsed policy, the grace period extends time to pay premiums, and the suicide clause limits payout if suicide occurs within a specified period.