In which situation would an insurer likely pay out a death benefit?

The scenario where the insured died after the policy was in force for two years is significant because many life insurance policies include a two-year contestability period. This means that during the first two years of the policy, the insurer has the right to investigate claims more thoroughly and can deny a claim based on misstatements or omissions made in the application. If the insured passes away after this two-year period, the insurer typically cannot contest the claim based on anything disclosed or undisclosed during the application process, barring instances of outright fraud.

This principle is foundational in life insurance as it protects consumers by ensuring that after two years, the policy is in full effect, and beneficiaries can be assured that they will receive the death benefit as long as the policy was maintained and premiums were paid. This makes it a stable and reliable provision for policyholders and beneficiaries alike.