Understanding the Contestability Clause in Life Insurance Policies
When purchasing a life insurance policy, many individuals find themselves overwhelmed by the technical terms and conditions included in the agreement. One term that often causes confusion is the contestability clause or contestability period. Unfortunately, failing to understand the implications of this clause can lead to life insurance claim denials and other significant issues down the line.
What is a Contestability Clause?
A contestability clause is a common provision found in nearly every life insurance policy. This clause is included to protect the insurance company from fraudulent claims, ensuring that they can investigate a policyholder’s death thoroughly within a set period after the policy is issued.
Typically, the contestability period lasts from one to two years. During this time, if a beneficiary files a death benefits claim, the insurance company will conduct a detailed investigation before approving the payout. If any misstatements or omissions are found in the original application—even if they were unintentional—the insurer has the right to deny the claim.
Common Reasons for Denial Due to the Contestability Period
One of the most frequent causes of life insurance claim denials during the contestability period is misstatements on the original application. These misstatements can lead to significant complications in processing claims, even if they were not made with malicious intent. Here are a few examples of potential misrepresentations that could result in a claim denial:
Incorrect Travel Plans: If the applicant indicated they would not be traveling abroad within the next year, but plans changed and they did travel, this could lead to a claim denial if the insurer finds the omission.
Smoking Habits: If the applicant stated they were a non-smoker, but they occasionally smoked, this could be seen as a misrepresentation, which could impact the validity of a claim during the contestability period.
Health or Medical History: Even small discrepancies in health-related information—such as failing to disclose a minor medical condition or medication—could result in denial if the insurer determines the information is important to the risk assessment.
The Importance of Keeping Your Policy Information Updated
It's crucial to understand that even accidental misrepresentations can have serious consequences during the contestability period. While it’s tempting to overlook updating your information to avoid higher premiums, failing to disclose important changes could result in your beneficiary’s claim being denied in the future.
If you experience any major life changes, such as a new medical condition, a change in lifestyle, or updated travel plans, you should immediately update your policy. While this may result in a higher premium, it will ensure that your beneficiary’s claim will be processed smoothly without unnecessary complications.
What to Do if Your Claim is Denied or Delayed
If your beneficiary’s claim is denied or delayed because of the contestability period, it’s essential to seek professional help. Consulting with an experienced life insurance attorney can be the difference between having a claim denied and successfully appealing it. An attorney with at least 15 years of experience in handling life insurance denials will know how to navigate the complexities of contestability clauses and the appeals process.
Our firm specializes in life insurance claim denials and has successfully resolved numerous cases by submitting a 100-200 page appeals brief to the insurance company. If your claim has been denied due to a contestability issue, contacting a qualified attorney can help you explore your options for challenging the denial and securing the benefits your loved ones deserve.
Conclusion: Protect Your Beneficiaries by Understanding the Contestability Clause
By familiarizing yourself with the contestability period and its impact on life insurance claims, you can avoid potential pitfalls that may arise when your beneficiaries need the policy’s death benefits most. Keeping your policy updated and accurately reflecting any changes in your life can help ensure that your beneficiaries won’t face an unnecessary struggle in collecting their benefits.
If your claim has been delayed or denied due to the contestability clause, don't hesitate to contact us for expert legal guidance. We’re here to help.