INCONTESTABILITY CLAUSE
A provision in a life or HEALTH INSURANCE policy
that precludes the insurer from alleging that the
policy, after it has been in effect for a stated period
(typically two or three years), is void because of
misrepresentations made by the insured in the
application for it.
An incontestability clause prevents an
insurer from denying benefits on the ground of
MISREPRESENTATION in the application. The
clause applies only when the policy has been in
effect for a specified period of time. This time
period, the contestability period, is usually two
or three years.
Most states maintain statutes that require an
incontestability clause in life and health insur-
ance contracts. The incontestability clause
strikes a balance between providing predictable
coverage and protecting the right of insurers to
select the precise risks they seek to insure.
Most incontestability clauses are limited by a
provision stating that the contestability period
must be completed within the lifetime of the
insured. With this nuance the insurer is able to
contest a claim for benefits after the contestabil-
ity period has lapsed if the insured dies before
the end of that period. This protects insurers
from providing benefits to someone who was
already so ill at the inception of the policy that
he or she died less than two years later. It means
that the insurer may contest the flow of insur-
ance benefits to the insured’s heirs.
Another common caveat to incontestability
clauses limits the period of disability. Under this
provision any disability that begins prior to the
expiration of the contestability period will toll
the period. In other words, if an insured
becomes physically disabled before the end of
the contestability period, the clock stops ticking
and the insurer may challenge claims during the
illness and beyond. Without such language, an
insured could always avoid contestability by
waiting until the contestability period has
expired before filing a claim.
Finally, some incontestability clauses con-
tain a FRAUD exception. Such a clause might
read, “After two years from the date of issue of
