What Does the Incontestability Clause Actually Do?
The incontestability clause prevents insurers from voiding or canceling a life insurance policy due to alleged misstatements or omissions after the policy has been in effect for two years—provided premiums have been paid. Even if the application contained errors, the insurer is generally barred from using those errors to deny a claim once that two-year window closes.
However, there are a few important exceptions depending on your state:
Incorrect age or gender may allow insurers to adjust the benefit, not void the policy
Blatant fraud or impersonation may still permit policy cancellation, even after two years
Policy rescission during the contestability period must usually occur within the lifetime of the insured
Each state may interpret these exceptions slightly differently, but in general, the incontestability clause severely limits the insurer’s ability to deny claims after the contestability period expires.
Why the Incontestability Clause Matters for Beneficiaries
Life insurers frequently use minor application mistakes as a pretext to deny death benefits. These mistakes are often clerical or harmless—like a misreported weight, forgotten past prescription, or minor pre-existing condition. While these might raise questions during the contestability period, they don’t typically justify a full claim denial after the two-year mark.
Once the policy passes the contestability period, the incontestability clause becomes active. At that point, insurers can only deny claims under very narrow circumstances, such as:
Proven fraud involving intent to deceive
Identity theft or impersonation
Policy procurement without insurable interest or permission
Even then, insurers are generally required to initiate a formal lawsuit to void the policy—especially after the insured’s death. In many states, simply mailing a denial letter is not enough. This added barrier is one of the reasons the incontestability clause works so well to protect families from unjustified denials.
How Insurers Try to Work Around the Incontestability Clause
Insurers have long tried to test the limits of this protection. A striking example involved a case in New York where a family trust had taken out a policy in the name of a relative. Years later, ownership of the policy was transferred to a different trust. When the insured passed away, the insurance company tried to deny the claim, alleging that the original blood samples didn’t match the person who died—suggesting that someone else had impersonated the insured at the time of application.
Although the insurer argued that this amounted to fraud, the court ruled in favor of the beneficiary trust. Because the contestability period had expired, and the claim involved legitimate beneficiaries, the incontestability clause barred the insurer from contesting the policy’s validity. The court emphasized that fraud allegations—when not proven within the contestability period—don’t override the clause in favor of people who were rightfully named as beneficiaries.
The insurer also argued that the original trust had no legal interest in the policyholder’s life and therefore shouldn’t have been able to take out the policy in the first place. But again, the court ruled that it was the insurer’s responsibility to verify insurable interest before issuing the policy, not years after the fact. The incontestability clause prevailed.
What to Do If Your Claim Is Denied After Two Years
If your life insurance claim has been denied, and the policy has been in force for more than two years, the first thing to check is whether the incontestability clause applies. If so, you may have a strong legal case for reversing the denial. While insurers may still attempt to deny benefits on grounds of fraud or misrepresentation, they often must file a lawsuit to do so—which they are frequently unwilling to pursue unless they are confident of victory.
Here’s how we help:
Review the policy and confirm the contestability period has expired
Investigate the insurer’s stated reasons for denial
Gather evidence to prove any alleged misstatements were non-material or made without intent
Represent you in negotiations or litigation to enforce the incontestability clause
This protection is especially important in employer-based group policies governed by the Employee Retirement Income Security Act (ERISA), which has strict procedures and short appeal windows. Missing a deadline under ERISA can jeopardize your ability to challenge the denial.
Frequently Asked Questions (FAQ)
Q: What is the incontestability clause in a life insurance policy?
A: It’s a legal provision that prevents the insurance company from canceling the policy or denying a claim based on misstatements after two years of continuous premium payments.
Q: Can a life insurance policy still be voided after two years?
A: Only in rare cases involving proven fraud, identity theft, or lack of insurable interest. Otherwise, the incontestability clause protects the policy and payout.
Q: Does every life insurance policy have an incontestability clause?
A: Nearly all modern life insurance policies include this clause, though the specific language and interpretation may vary by state.
Q: What if my claim is denied based on information from the application?
A: If the denial happens after the two-year period, you may be protected. Contact a life insurance attorney to review your policy and challenge the denial.
Q: Is the incontestability clause different from the contestability period?
A: Yes. The contestability period is the first two years after the policy starts. After that period ends, the incontestability clause kicks in to limit the insurer’s power to deny claims.