How the Contestability Clause Can Lead to Life Insurance Claim Denials
A critical component of every life insurance contract is the contestability clause—a legal provision that gives insurers the right to investigate and deny claims within a specific window, usually the first two years after the policy is issued. During this period, if the insurer uncovers material misstatements, omissions, or fraudulent information in the application, it may use the contestability clause to void the policy and deny the death benefit. Understanding how this clause works and the types of scenarios that trigger it can help you avoid costly surprises during an already painful time.
What Is the Contestability Clause in Life Insurance?
The contestability clause is a standard provision in most life insurance policies that allows the insurer to examine the accuracy of the information provided on the application within the first one or two years of coverage. If the insured passes away during this period, the insurance company can review the application for discrepancies—regardless of the cause of death. If it discovers that important facts were omitted or inaccurately presented, it can rescind the policy and deny the claim, even if the misrepresentation had no connection to the death. After the contestability period ends, insurers can generally only deny claims for fraud—which requires proof of intentional deception.
Common Scenarios Where the Contestability Clause Is Invoked
1. Material Misrepresentation of Health Conditions or Lifestyle Habits
One of the most common reasons a claim is denied during the contestability period is the discovery of misrepresented health conditions, smoking history, or other lifestyle habits that affect the insurer’s risk assessment. Insurers rely heavily on accurate disclosures when calculating premiums and determining whether to issue a policy.
Example: A man applies for life insurance, claiming he is a non-smoker in good health. He dies 18 months later from a heart attack. During the investigation, the insurer uncovers medical records showing he had been treated for hypertension and smoked regularly. The insurer argues that this misrepresentation was material and denies the claim, stating that the policy would not have been issued—or would have been issued with higher premiums—if the true information had been known.
2. Concealment of High-Risk Activities or Hobbies
Applicants are often asked about their participation in dangerous activities such as skydiving, scuba diving, or race car driving. If these activities are omitted and the insured later dies as a result of one of them, the insurer may deny the claim during the contestability window.
Example: A woman who regularly skydives applies for life insurance but fails to mention her hobby. After her death in a skydiving accident, the insurer investigates and discovers the omission. Because this activity significantly increased the underwriting risk, the company uses the contestability clause to deny the claim, citing the incomplete disclosure of hazardous behavior.
3. Use of Fraudulent Documentation or False Identity
Submitting false information or doctored documents to obtain a life insurance policy is a serious offense and nearly always results in denial if discovered during the contestability period.
Example: An applicant submits fake medical records to hide a cancer diagnosis and uses an alias to complete the application. After the policyholder dies within 18 months of issuance, the insurer uncovers the fraud. The contestability clause allows the insurer to retroactively void the contract and deny the death benefit due to the deliberate misrepresentation and identity fraud.
4. Failure to Disclose Prior Medical Diagnoses or Treatments
Even if a condition is currently inactive or in remission, failing to disclose a past diagnosis can raise red flags. Insurance companies expect a complete and truthful health history, including past illnesses and treatments.
Example: A policyholder with a history of lymphoma fails to disclose it when applying for coverage. The condition later returns, and the insured dies 20 months after policy issuance. The insurer investigates the medical history, discovers the previous diagnosis, and denies the claim based on the argument that the misrepresentation was material to the issuance and pricing of the policy.
5. Omitted Family Medical History or Prescription Use
Applications often include questions about family history and prescriptions. Failing to list commonly prescribed medications or hereditary conditions can also trigger a claim denial during the contestability period.
Example: A person fails to disclose regular use of blood pressure medication and omits that both parents died of cardiovascular disease. If the insured dies from a stroke within the two-year period, the insurer may view the failure to disclose this information as a significant misrepresentation affecting their underwriting process.
FAQ: Life Insurance Contestability Clause and Claim Denials
What is the contestability period in life insurance?
It’s typically the first one or two years after a policy is issued, during which the insurer can investigate and deny claims based on misstatements or omissions in the application.
What happens after the contestability period ends?
Once the contestability period expires, the insurer can only deny a claim for fraud—which requires proof of intentional deception.
Can a claim be denied for something unrelated to the cause of death?
Yes. During the contestability period, insurers can deny a claim for any material misrepresentation, even if it’s unrelated to the death.
Is every mistake on an application grounds for denial?
No. Only material misstatements—those that would have affected the insurer’s decision—can justify denial. Minor or irrelevant errors generally don’t qualify.
What if the applicant forgot to mention a past condition?
Even unintentional omissions can be used to deny a claim during the contestability period. However, an attorney may argue that the omission wasn’t material.
Can I appeal a contestability-based denial?
Yes. You have the right to appeal. Many denials are reversed when challenged with the help of a life insurance attorney.
What if the insurer accuses the applicant of fraud?
They must prove it. Fraud is a high standard and typically requires evidence of intent, such as falsified documents or knowingly false statements.
Do risky hobbies need to be disclosed?
Yes. If the application asks about dangerous activities, full disclosure is necessary. Omitting these can lead to denial if death results from such an activity.
Can I get legal help after a denial during the contestability period?
Absolutely. We specialize in challenging wrongful denials and do not charge upfront. We only get paid if we win your case.
How soon should I act if my claim is denied?
Immediately. The longer you wait, the harder it becomes to gather necessary records and dispute the insurer’s findings. Contact a life insurance attorney as soon as you receive the denial.