Which statement describes how an life insurer may obtain an adjudication of its power to rescind a contract?

• A. I only.
• B. II only.
• C. Both I and II.
• D. Neither I nor II.

Answer: (C)

Two valid ways exist for an insurer to get a court to determine whether it can rescind a life insurance contract. One path is a declaratory judgment action, where the court is asked to clarify the insurer’s rights and whether the facts meet the conditions for rescission—providing a binding determination without immediately cancelling the contract. The other path is a traditional rescission suit, in which the insurer asks the court to cancel the policy and recover or cancel out the premiums if misrepresentation or concealment is proven. Because both avenues yield a formal adjudication of the insurer’s power to rescind, selecting that both are described in the statements is the best choice. In practice, insurers must follow applicable procedures and timing rules, but either route can establish the insurer’s authority to rescind.