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What is an Incontestability Clause?

Researcher & Writer
December 16, 2019

An incontestability clause is a protection for life insurance policies in which a claim cannot be denied by a life insurance company, regardless of any false claims or omissions by the insured. Usually, the incontestability clause takes effect after a life insurance policy has been in force for two years. This two-year period is known as the "contestability period."

The one exception to this clause is a misstatement of age or gender. If an insured lies about their age or gender on a life insurance application, the death benefit payout or premiums can be altered at any time during the contract to reflect the insured's actual age or gender.

The 2-year constestability period

The two-year contestability period starts from when the policy was first put in force by the carrier. If you die in the first two years of the policy and the carrier has valid grounds to contest the policy’s validity, the company may choose to forego paying the death benefit and make a claim against the insured for some type of fraud.

You should know that the 2 year contestability period is separate from the life insurance suicide exclusion period.

Why allow a 2-year contestability period?

When the topic of life insurance contestability arises, the first question is normally, "why? Why are companies allowed to contest the claim when they’ve already accepted the application and the policy is in place?" In fairness, this is a good question, but you also have to look at the situation from the perspective of the insurance company.

Unfortunately, there are a few people that lie on their application forms in order to get a cheaper life insurance or a better policy. Typically the misrepresentations are only for the initial life insurance quotes, as the carriers usually turn up anything that the an applicant failed to divulge.

And of course, there are also others that make genuine mistakes but, in either case, the contestability period protects the company from having to pay out on a policy that shouldn't have been valid in the first place.

All things considered, not every case falling within the two year contestability period will be investigated—but it depends on the circumstances. Typically, the insurance company will work on a case-by-case basis. If they have evidence to suggest that some information is incorrect, this is likely to trigger an investigation.

In other scenarios, the way in which the policyholder died may also cause suspicion. If the insured passes away from heart disease within six months of setting up a policy where they stated good health, this will be a red flag for the company.

But if the insurance policy considered the heart disease and this information was included, there shouldn't be an issue with the payout.

Onus on the insurance company

The onus is on the insurance company to prove some sort of fraud occurred.

What is interesting is that this does not follow the normal rules of contracts. Typically, if fraud is discovered, the offended party has a lot of options under the law, including rescinding the contract.

However, for reasons beyond the scope of this article, typical contract law does not apply to life insurance companies when contesting a claim outside the scope of the two year contestability period.

What do companies look for when considering contesting a claim?

In truth, this could be a whole manner of things but the most common areas of the application where people tend to lie is within the medical history, occupation, drug/alcohol use, smoking, and hobbies.

Medical History

If you were to submit a clean bill of health even though you’re suffering from all sorts of health conditions, an investigation could find this after death and a dispute will be placed against your claim. Later, we’ll see exactly what this means for your beneficiary and the death benefit.


With some dangerous jobs, it costs more money to get insurance because the providers are trying to calculate how likely you are to be a good investment; i.e. beyond the realms of the extraordinary or factors that cannot be accounted for, how safe is your life over the next period of time. By not revealing your true vocation, the policy might not be valid and this can cause many problems.

Drug/Alcohol Use

With some providers, they don’t cover people who drink or regularly take drugs, including marijuana use, so some people decide to omit this piece of information. Whether it’s because they don’t think it’s important or that they plan to quit and hope they can do so before it ever becomes an issue, it causes problems for thousands each year.


With most applications, especially online, you simply tick ‘Yes’ or ‘No’ for smoking so some people will click the ‘No’ regardless because they know it will reward them with lower non tobacco life insurance premiums. However, what they don’t realize is that fabricating the truth will cause problems with their claim and it leaves family members potentially without recourse.


For those of you who have a policy with certain exclusions built into the policy, it is important to be aware that the incontestability exclusion does not apply to death caused by the very thing your policy does not cover.

The aviation exclusion is one of the most popular life insurance exclusion riders that allows a carrier to avoid paying a claim if the insured died due to travel or flying in an aircraft as a pilot or for the purpose of parachuting/skydiving.

Aviation exclusion

For those of you who have a policy with certain exclusions built into the policy, it is important to be aware that the incontestability exclusion does not apply to death caused by the very thing your policy does not cover.

The aviation exclusion is one of the most popular life insurance exclusion riders that allows a carrier to avoid paying a claim if the insured died due to travel or flying in an aircraft as a pilot or for the purpose of parachuting/skydiving.

How does an insurance company claim work?

To start, the insurer will start an investigation and this means they’ll take some time to gather all the information they have on the insured. If they find something suspicious along the way, there are two main routes the insurance company can take;

First, they could pay out the death benefit to the beneficiary MINUS the amount the insured avoided by lying or making the mistake on the application form. For example, a smoker who ticked ‘No’ in the application would have the death benefit reduced by the amount they should have paid.

Second, and this is only if the application would have been denied had all the correct information been available, the provider can reject the claim completely. In this scenario, all the paid premiums will be returned to the beneficiary.

What about death by suicide?

Before we head onto what happens if the claim is approved after an investigation, we should make a quick note on suicide because this is an important, and sensitive, topic. With most policies, they come with a two-year suicide exclusion for the insurance company.

Essentially, this means that the insurance company doesn’t have to pay a penny (beyond premiums paid) if the insured commits suicide within two years of the policy starting.

Considering the circumstances and what life insurance is used for, this makes sense. Otherwise, those who were going to commit suicide anyway would set up a policy and leave thousands to their family after just one payment.

Once these two years are up though, the entire policy becomes incontestable and this includes suicide.

No matter how the insured dies, the company will have to pay the full death benefit to the beneficiary.

For the most part, suicide is hard to prove which makes this topic a sensitive one. If you recently had a loved one commit suicide and the insurance company is rejecting your claim even though the policy has been in place for more than two years, we recommend getting in contact with an attorney who knows your rights and can help you resolve this matter.

Payout after an investigation

So we’ve covered what happens during the investigation and what can happen if there was a mistake in the application.

However, what happens if the policy was legitimate?

By the time the approval comes through, it has been some time since the death of your loved one and you may have had various expenses without the death benefit.

In this scenario, the death benefit will actually come with interest added on top of the total death benefit in order to refund the time lost.

With this in mind, it raises the question of how long an investigation can last. It will vary from one case to the next.

If the investigation is straightforward and doesn’t require the insurance company to gather evidence or information from any other source, you won’t see as big of a delay as if the investigation requires more details.

Important facts regarding life insurance contestability period

To finish, we just want to take you through some of the key bits of information you should know during the contestability period.

Honesty is the best policy - First and foremost, how can we start anywhere other than urging you to be truthful during the application for your chosen policy?

By lying, you put your policy in jeopardy and you pay each month for a policy that isn't likely to pay out anyway (depending on the severity of the lie).

By being honest, you might end up paying a little extra per month but surely this is better knowing your family and death beneficiary will definitely get the money after you pass away?

Let’s not forget, the insurance company will have to pay out if you were completely honest during the application process so why even risk it?

On this same note, be sure to check the information you enter two and even three times.

Today, you’ve seen how the investigation process works so it helps your family and friends to give the information a once over to ensure you haven't made mistakes. If necessary, you could contact an agent just so they can look over your application form to check for errors (and maybe even find you a cheaper and more appropriate policy!).

Insurance provider honoring - If you die within the contestability period and your application comes back clean, the insurance provider MUST pay out even if it happens just two hours after being confirmed and this is important to remember. If you’ve had a relative who didn't make any mistakes and the provider is failing to pay the claim, they’re actually going against the contract and the beneficiary will be entitled to the money.

Fraud - If you’re sitting on a false policy where you lied to receive a lower premium, it’s not a case of ‘all bets are off’ past the two-year mark because you can actually get into trouble for fraud. With finances involved as well as a legal document, knowingly providing false information for financial gain is against the law.

Second Contestability Period - In some cases, a second contestability period can actually begin even if you were just one month away from completing the first one. For example, a missed premium is the most common reason for this. After missing a payment, if the policy is beyond the 30 day grace period, it may need to be reinstated which means the contestability period starts all over again, which is yet another reason why it’s important to stay on top of all payments.


With this information about the incontestability clause in mind, you should know what to do—whether it’s your policy you’re worried about or the policy of a loved one.

In the end, there is nothing like the peace of mind knowing your loved ones are provided for if you die prematurely. Therefore, don’t take the risk. Be truthful on your application and you (and your family) won’t have anything to be worried about.

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