Life Insurance Policy Provisions, Riders & Options

Correct

The answer is B: March 11th

The free look period runs from the date the policy is delivered, not the date it is issued, because the owner needs the policy in hand to review it. The day of delivery isn't counted, so a 10-day window after a March 1st delivery ends on March 11th; a return by then gets a full refund of premiums paid. Texas sets no statutory free look for an ordinary new life policy, so this 10-day period comes from the policy itself; a policy that replaces existing coverage must allow 30 days (Insurance Code §1114.053(e)).

Source: Insurance Code §1114.053(e)

Correct

The answer is D: Pay the full death benefit, as the incontestability period has expired.

Texas requires every life policy to provide that once it has been in force for two years from its date of issue during the insured's lifetime, it is incontestable except for nonpayment of premium (Insurance Code §1101.006). This policy passed that point on March 1, 2023, before the insured died. Insurance Code §705.104 points the same way: after the second anniversary, with premiums paid, a misrepresentation defense fails unless the insurer had notified the insured that it intended to rescind, or shows at trial that the misrepresentation was material and intentionally made. This misstatement was an honest mistake, so the insurer must pay the full death benefit.

Source: Insurance Code §1101.006 · Insurance Code §705.104

Correct

The answer is B: The death benefit will be paid, minus the unpaid premium.

The Grace Period provision keeps the policy in force for a period after the premium due date even though the premium hasn't been paid. Texas requires a grace period of at least one month (Insurance Code §1101.005), and many policies state it as 31 days. If the insured dies during the grace period, the death benefit is paid minus the overdue premium. The insured died on May 20th, well within the grace period that began May 1st, so the policy was still in force.

Source: Insurance Code §1101.005

Correct

The answer is A: No — after 2 years, the incontestability clause bars contesting it.

A Texas life policy must become incontestable once it has been in force for two years from issue during the insured's lifetime, except for nonpayment of premium (Insurance Code §1101.006). Section 705.104 agrees for honest errors: after the second anniversary, with premiums paid, a misrepresentation defense fails unless the misrepresentation is shown to be material and intentionally made, or the insurer had already notified the insured that it intended to rescind. This statement was an honest mistake, so the insurer cannot void the policy over it.

Source: Insurance Code §1101.006 · Insurance Code §705.104