Is your life insurance company withholding benefits from you? Incontestability is one of the strongest protections for a policyholder or beneficiary. Many other insurance rules favor the companies, but this one clearly favors the consumer.

In life insurance, two parties are involved: the insurance company and the policyholder. When a party gives false or incomplete information that the other party relied on when making the contract, the other party has the right to void or cancel the contract. The other party can claim that the contract was never valid. Insurance companies are prohibited from doing exactly that by the incontestability clause.

States began requiring life insurance companies to include these clauses about a century ago. Almost all policies today contain this provision. The clause typically states that after two years (or one year in some states), the company cannot void the policy if the policyholder pays the premiums.

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.” The contestable period varies by state but is no longer than two years.

In other words, if you die within two years of acquiring your policy, the insurance company could, and often would, refuse to pay any benefits until it has completed a thorough investigation surrounding your death. Additionally, the company will carefully review your application forms and your medical records to determine if there are any inconsistencies with which to contest your policy. 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 Happens After Two Years?

When you have the policy for two years, it becomes “incontestable,” which means it is, essentially, impossible for the company to refuse to pay, except under exceptional circumstances, such as when the fraud was committed to obtain the policy.

For example, if you recently discover you have a fatal cancerous tumor, and you apply for life insurance without mentioning it, not having it noticed during the physical or a background check, AND you manage to survive for at least two years, the insurance company must pay out the benefit in most states, even if it can prove that you purposely lied on your application.


Typically, state laws permit three exceptions to the incontestability clause.

The insurance company could not cancel the policy if the insured person misrepresented their age or gender when applying for life insurance. Instead, it may adjust the death benefits to reflect the real age of the policyholder.

Life insurance companies may include a provision stating that the contestability period must be within the insured’s life in some states. If a policyholder was unwell at the time of application for coverage and died within that period, an insurance company can refuse benefits.
In some states, the insurance company can also void the policy if it can prove deliberate life insurance fraud.

Life Insurance Fraud

Policyholders who complete their initial application for life insurance and medical questionnaire fraudulently are not protected by the incontestability clause.

For example, suppose the policyholder intentionally lied about having a smoking habit and died within the contestability period. In that case, the life insurance company will rescind the policy and the beneficiaries’ claims for the death benefit. If the policyholder dies after the contestability period when the incontestability clause is in effect, the life insurance company will still deny beneficiaries’ claims.

The definition of life insurance fraud differs from state to state. In many states, the life insurance company must prove the policyholder intended to deceive.

Misstating Age or Gender

The life insurance company cannot void coverage if a policyholder incorrectly recorded their age or gender on their initial application for life insurance. They must instead deduct what they would have been paid in premiums from the death benefit and pay it to the beneficiary.

Consumers Benefit From the Incontestability Clause

When applying for life insurance, it is easy to make a minor mistake. Before a policy can be approved, applicants must provide a complete medical history. An insurance company may deny paying benefits if the applicant fails to disclose a hospital stay, illness, occupational hazard, or even an allergy on their application.

In fact, this was often the standard practice for life insurance companies in the late 1800s. Many insurance companies used deceptive practices to collect premiums and deny benefits on technicalities. Reputable insurance companies first introduced the incontestability clause to build consumer trust. To clean up the industry’s image, insurance companies offered full benefits after the policy had been in place for two years (even if there were mistakes in the application). The incontestability clause proved so successful that, in the early 20th century, state governments began passing laws requiring insurance companies to include it.

When a person purchases life insurance, the contestability period begins to run. After two years, if the insurance company has not found an error in the application, they guarantee benefits. Even within that period, rescinding a life insurance policy is not easy.

The company must file suit in court to void the contract under most state laws. Notifying the policyholder is not enough.

How to Respond if Your Policy is Challenged

The right to rescind your policy allows you to contest that claim. If you are the beneficiary of life insurance, but the company withholds benefits, the incontestability clause may force the company to pay.

You will be able to determine your case’s outcome based on your case’s facts. That is why you need legal assistance.

Why Do Most People Refuse to Lie on Their Insurance Applications?

Most people would not lie on their insurance applications due to several serious issues. First, insurance fraud is a crime, which means you can end up in jail if someone finds out what you’ve done before you pass away. Even worse, if someone else filed the application for you, such as your spouse, then THEY could go to jail even after you die.

Besides that, there are several exceptions to the incontestable rule:

  1. Age: Unlike other material misrepresentations, lying about your age is not protected by the two-year rule. If it is discovered after you die, state law usually prohibits the company from canceling the policy outright, so it will simply adjust the benefit to the amount you would have received if you had accurately stated your age, minus the missed premiums.
  2. Impostor: In some states, if you have an impostor take a physical exam to get life insurance, then this will automatically nullify the policy, regardless of when it is discovered.
  3. Deaths not covered by the policy: It is important to remember that all these rules only apply to deaths that are actually covered by the policy. Suicide, for example, will almost certainly be expressly excluded from the policy, so if it is discovered that the death resulted from suicide, the insurance company will not be required to pay any benefits.

Do I Need a Lawyer for Help with Life Insurance Issue?

The life insurance industry is notoriously slick when pinpointing the exact dates of incontestability and will look for any loophole to avoid paying out a benefit. Suppose you think you are being unfairly denied your benefits under a policy. In that case, you should contact an insurance lawyer immediately to discuss the possible remedies and whether you can force the company to pay out or even sue the company civilly if they are acting in bad faith.