Under what circumstances may policy rescission occur?

The correct choice pertains to the specific circumstances surrounding the insured's actions or situations that may affect the validity of the policy. Policy rescission occurs when an insurance company cancels a policy retroactively due to misrepresentation or concealment of material facts by the insured at the time of application.

In the context of military action, certain insurance policies may explicitly exclude coverage if the insured dies while engaged in such activities, especially if this was not disclosed at the time of obtaining the insurance. If the insured failed to disclose their military status or understood that their activities would affect their coverage, this can lead to rescission of the policy upon their death in military action.

This highlights the critical nature of full disclosure when applying for life insurance, as the insurer relies on the information provided to assess risk and determine coverage. The other choices, while they involve scenarios that could potentially affect insurance coverage, do not typically lead to rescission in the same way. Non-payment of premiums typically results in a policy lapse rather than a rescission. Changes in occupation may require reevaluation of risk but do not automatically trigger rescission, and claims made after a policy has lapsed generally result in denial of the claim rather than a cancellation of the policy itself.