Life Insurance Incontestable Period Lawyers

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What are the "Contestable and Incontestable Periods" in My Life Insurance Policy?

Life insurance policies are all mandated by law to have only a short window in which the company can rescind its benefits, which is known as the "contestable period."  While the laws vary from state to state, the period is never longer than two years.  This means that if you die within two years of acquiring your policy, the insurance company can (and will) refuse to pay any benefit until it has concluded an investigation surrounding your death (and the investigation will be quite thorough).  They will closely scrutinize your application forms and your medical records, looking for any disparities with which to deny you your claim.  If it finds sufficient misrepresentations, it may also alert prosecutors and bring you up on criminal counts of insurance fraud (in addition to keeping all of your benefits and premiums). 

What About After Two Years?

After you've had the policy for two years, it becomes "incontestable," which means it is, essentially, impossible for the company to refuse to pay the benefit, except under extraordinary circumstances, even when fraud was committed in acquiring the insurance.   

For example, if you recently discover you have a fatal cancerous tumor, and you apply for life insurance without mentioning it (somehow getting past the physical), AND you manage to survive for at least two years, the company must pay out the benefit, even if it can show that you purposely lied on your application (in most states).  

Then Why Doesn't Everyone Lie on Their Insurance Applications?

Well, there are several serious problems that would usually prevent most people from attempting this.  First of all, insurance fraud is a crime, which means if someone discovers what you've done before you die, you can end up in jail.  Or even worse, if someone else submitted the application for you (like your spouse), then THEY could go to jail even after you die.  

Aside from that, there are several exceptions where the incontestable rule does not apply:

  1. Age:   Unlike other material misrepresentations, lying about your age is not protected by the two year rule.  However, if it is discovered after you die, usually state law forbids the company from canceling the policy outright, it will simply adjust the benefit to what you would have received if you had accurately represented your age (minus the missed premium costs) 
  2. Impostor:  In some states, if you have an impostor take a physical exam for you (in order to get life insurance), then this will automatically nullify the policy, regardless of when it is discovered.
  3. Deaths not covered by policy:  It is important to remember that all these rules only apply to deaths that are actually covered.  Suicide, for example, will almost certainly be expressly excluded in the policy, so if it is discovered that the death was the result of suicide, no benefits must be paid.

Do I Need a Lawyer?

Life insurance companies are infamously slippery when it comes to the precise dates of incontestability, and will look for any sort of loophole they can find in order not to pay out a benefit.  If you think you are being unfairly denied your benefits under a policy, you should contact an insurance law attorney immediately to discuss the possible remedies, and whether you can force the company to pay out (or even sue them civilly if they are acting in bad faith).

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Last Modified: 11-22-2011 04:36 PM PST

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