No, the insurer is not prohibited from contesting any claim on a life insurance policy after the annual premiums have been paid for.
While the rules allow insurers to repudiate (or reject) death claims within the first three years of a life insurance policy due to misrepresentation or suppression of all material facts, their options for repudiating claims are limited if the death occurs after this period. However, it is critical for a policyholder not to take refuge under this 3-year clause because the surviving family members may face a lengthy claim settlement process if the case goes to court.
When an individual applies for life insurance policy, the underwriters of the insurance companies determine whether or not the individual buyer is eligible for coverage based on the information provided. In the absence of such factual information or material fact, unhealthy lives may be covered, posing a risk to the entire group of insured lives and potentially violating contractual obligations.
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