Which clause states that the insurer cannot contest the policy after a specified period?

• A. Binder
• B. Incontestable clause
• C. Contract of adhesion
• D. Valued policy

Answer: (B)

Incontestability clauses limit how long an insurer can challenge the policy after it has been in force. After the policy has been active for a specified period (commonly two years), the insurer generally cannot contest its validity or deny a claim based on misstatements or omissions in the application. This provides stability and protection for the insured and beneficiaries, ensuring that the policy stays enforceable once that allotted period passes. There are usually exceptions for outright fraud or certain misstatements discovered after the period, and some policies allow adjustments if a misstatement affects premium or benefits.

The other terms describe different ideas: a binder is a temporary coverage document issued before the policy is issued; a contract of adhesion refers to contracts drafted by one party with little to no negotiation; and a valued policy is one that pays a stated amount regardless of actual loss. None of these address a time-limited insurer right to contest a policy, which is why the incontestability clause is the correct concept.