Life insurance claims denied during the contestability period typically involve allegations that the insured made a material misstatement on the policy application. The contestability period gives insurers a limited window to investigate application accuracy, but it does not give them unlimited authority to deny claims.
Most disputes during this period turn on whether the alleged misstatement was material and whether the insurer followed the required legal process.
What the Contestability Period Allows
The contestability period usually lasts two years from the policy issue date. During this time, the insurer may review the application and underwriting file if a claim is submitted.
The insurer may deny the claim only if it proves that a material misrepresentation occurred. The existence of the contestability period alone does not void coverage.
Material Misrepresentation Is Required
To deny a claim during the contestability period, the insurer must show that the insured made an incorrect statement that was material to the risk. Materiality generally means the insurer would not have issued the policy, or would have issued it on different terms, had the correct information been disclosed.
Minor inaccuracies, omissions unrelated to underwriting, or information that did not affect risk classification often fail to meet this standard.
Intent Is Not Always Presumed
Although fraud requires intent, most contestability denials rely on alleged misrepresentation rather than intentional deception. Insurers frequently deny claims without proving that the insured knowingly provided false information.
When application questions are vague, subjective, or poorly defined, insurers often struggle to establish that the insured understood the information being requested.
Cause of Death Is Often Irrelevant but Still Examined
Insurers may deny claims based on misstatements even when the alleged error had no connection to the cause of death. While some jurisdictions permit this, courts frequently scrutinize whether the omission actually mattered to the underwriting decision.
The lack of any relationship between the alleged misstatement and the death often weakens the insurer’s position.
Application Ambiguity Limits Denials
Courts regularly hold that ambiguous application questions are interpreted against the insurer. If a question can reasonably be understood in more than one way, an answer is less likely to support rescission.
Insurers bear responsibility for drafting clear and objective application questions.
Rescission Requires Procedural Compliance
When an insurer attempts to rescind a policy during the contestability period, it must comply with state-specific procedural requirements. These often include notice obligations, timing requirements, and refunding premiums.
Failure to follow these procedures can invalidate the rescission even if a misstatement occurred.
Post-Claim Underwriting Is Closely Scrutinized
Many contestability denials are based on information uncovered only after death. Courts often examine whether the insurer reasonably could have discovered the information during underwriting.
Rescission based entirely on hindsight review is frequently challenged.
What Beneficiaries Should Review After a Contestability Denial
If a claim is denied during the contestability period, beneficiaries should examine:
The exact application questions relied upon
The alleged misstatement and supporting evidence
The insurer’s underwriting guidelines
Whether the insurer followed rescission procedures
The timing of the denial relative to policy issuance
These cases are typically document driven rather than fact disputed.
How This Issue Fits Into Life Insurance Claim Disputes
Contestability period denials are a narrow subset of misrepresentation based life insurance disputes. They differ from exclusions, lapse, or beneficiary conflicts because coverage is challenged based on application accuracy rather than policy terms.