Other Than Life (OTL) Practice Exam 2026 – All-In-One Guide to Exam Success!

The option related to fraudulent activity correctly identifies a significant factor that can lead to the cancellation of an insurance policy. Insurers have a legal and financial interest in preventing and addressing fraud, as it can result in unjustifiable claims that undermine their ability to operate and provide coverage fairly. If a policyholder is found to have committed fraud—whether through misleading information during the application process, submitting fraudulent claims, or misrepresenting their situation—this breach of trust allows the insurer to cancel the policy as it violates the terms agreed upon at the inception of the contract.

In contrast, the other options do not typically result in cancellation. Payment of premiums is essential for maintaining coverage; without it, a policy may lapse, but this is not the same as cancellation for cause. Policyholder satisfaction, while crucial for ongoing business relations, doesn't influence the contractual validity in a way that could cause cancellation. Finally, adjustments to insurance coverage reflect standard practices in policy management and do not inherently lead to cancellation unless they violate policy terms or regulatory requirements.