Which insurance policy provision allows an insurer to terminate benefits based on non-disclosure?

The provision that allows an insurer to terminate benefits based on non-disclosure is the Incontestability Clause. This clause typically specifies that, after a specified period (often two years), the insurer cannot contest the validity of an insurance policy or deny a claim based on misstatements or omissions made by the insured, except in cases of fraud. This provides a level of security for policyholders, as it assures them that after a certain time, their coverage will remain intact despite any unintentional errors in their application.

This clause is critical because it reinforces the importance of full disclosure at the time of application while also protecting policyholders from losing their benefits due to non-disclosure issues that arise after the initial contestability period. The two-year time frame is standard in many jurisdictions, providing both a grace period for oversight as well as certainty for the insurer regarding the risk they are covering.