What is the two-year contestability period in life insurance?
Answered by 6 licensed agents
The time period in which, if the insured dies, the company can come back and contest the death benefit payment until research determines there were no misrepresentations were made on the original insurance policy application.
The two-year contestability. in life insurance is to protect the insurance company. During the first two years of the policy, if death is by suicide they do not pay out, that is a suicide clause, but if the death is caused by any medical reason other than suicide, the insurance company has the right to review to see if the policy owner / insured new about and omitted or fraudulently stated no to health questions that referenced the medical condition that caused the death. If found fraudulent the company will not pay the death benefit.
The first two years from the policy's effective date is known as the contestability period. During this period, the insurance company has the right to review and potentially deny a claim if it finds something that would have affected the coverage was either left off of the original application or the information on the application was inaccurate.
There is a two-year period from the start of your insurance contract where if there are any discrepancies determined on your application, they can be contested. After this period, they can no longer be contested.
