Which of the following is NOT a valid reason for midterm cancellation?

• A. Nonpayment of premium
• B. Material misrepresentation
• C. Change in marital status
• D. Substantial breach of policy conditions

Answer: (C)

Midterm cancellation must be tied to the insurance contract or the risk the policy was underwritten to accept. Not paying the premium is a straightforward breach that can justify cancellation midterm because ongoing coverage depends on timely payment. Material misrepresentation on the application undermines the insurer’s risk assumptions, so cancellation or rescission is permitted if the misrepresentation was material. A substantial breach of policy conditions—for example, failing to meet required duties or engaging in prohibited use of the policy—also provides a valid basis to cancel during the term.

Change in marital status does not by itself alter the insured risk or breach any policy terms. It may require updating information or adjusting riders, but it isn’t, on its own, a valid midterm cancellation reason.