Understanding the Life Insurance Contestability Period (2024) (2024)

FAQs

Can claims be denied after contestability period? ›

Once the contestability period has expired, the only way an insurance company can legally deny paying benefits other than for non-payment of premiums or an applicable policy exclusion is to show the policyholder intentionally provided false information that was significant to underwriting the risk.

If the life insurance policy holder dies within the contestability period, the life insurance company will investigate whether the insured provided accurate information on the policy application.

The contestability period allows your life insurance company to review your application for intentional errors after a death claim. The period of contestability usually lasts two years. If you get a new policy or reinstate your policy after a lapse, the period of contestability restarts.

You were probably shocked when you got a letter in the mail saying that your loved one's life insurance claim is denied. You're not the only one. An estimated 10 percent of rightful insurance claims will be denied every year.

The good news is that you likely won't need to worry about having a claim denied if you're truthful with your life insurance company from the start. Instances of lying, criminal activity, or dangerous behavior that's not disclosed upfront could all be reasons life insurance won't pay out.

They can include engaging in risky hobbies and behaviors like skydiving; having a history of DUIs or speeding tickets; having a dangerous job like roofing; having a criminal record or a less than ideal financial history; being a smoker; and failing a drug test.

Creditors cannot come after life insurance when paid to a beneficiary. Your beneficiaries can spend the death benefit money however they want.

Creditors will not be able to take the death benefit payout for your life insurance policy unless you leave the money to your estate. If you name other people as your beneficiaries, the money will go to them and the creditors won't have access to it.

Beyond the contestability period, the cause of death is generally not relevant to the life insurance company's determination of whether to pay the benefit. Other grounds for denial are still possible, however, such as failure to pay the premiums.

A "contestable period" is a contractual provision that is often found in a life insurance policy. The contestable period usually covers a period of one or two years from the effective date the insurance policy, depending on the terms actually written on the policy.

Why are life insurance cases frequently incontestable? ›

Most life insurance policies include an incontestability clause, which closes the door on the contestability period and prevents life insurance companies from denying beneficiaries' claims due to a misstatement or omission on the policyholder's initial application for life insurance and medical questionnaire.

All life insurance policies have a period of contestability, usually a span of two years, during which the insurer can investigate the application for fraud and misrepresentation and consequently deny a claim for death benefits.

For example, applicants might lie about their age, income, weight, medical conditions, family medical history or occupation. It's also relatively common for applicants to lie about their alcohol or drug use.

A contestability period typically lasts for the first two to three years after the policy becomes effective, during which insurers may deny claims under certain circ*mstances. Be honest on your application and understanding the policy terms and conditions may help avoid a potential claim denial for your beneficiaries.

All life insurance policies have a period of contestability, usually a span of two years, during which the insurer can investigate the application for fraud and misrepresentation and consequently deny a claim for death benefits.

An incontestability clause is a provision in a life or disability insurance policy that prevents the insurance company from canceling the policy based on misstatements in the policy application after the insurance has been in effect for a certain period of time, usually two years.

But it's important to be aware that there are a few instances where life insurance won't pay out. Top reasons life insurance won't pay out may be because the policyholder lied on their application, their death was the result of suicide, or they passed away during the waiting period.