Most life insurance policies contain a two year contestability clause, and this clause is one of the most powerful tools insurers use to deny claims. During this window, the insurance company is allowed to scrutinize the policy application and the circumstances surrounding the insured’s death in ways that would not be permitted later.
What many beneficiaries do not realize is that a contestability denial is not automatic, and it is not enough for an insurer to simply find an error. The key issue is whether the insurer can legally connect that error to its underwriting decision in a meaningful way.
Understanding how insurers approach contestable period investigations helps explain why so many early claims are denied and why many of those denials are ultimately overturned.
What Insurers Are Actually Looking For During Contestability
During the first two years after a policy becomes effective, insurers aggressively search for inconsistencies between the application and the insured’s real world history. Their investigation often goes far beyond the cause of death.
Common areas of review include:
• Medical records from years before the application
• Prescription drug histories
• Physician notes that were never shared with the applicant
• Prior insurance applications with different answers
• Employment records and occupational risk
• Social media activity showing lifestyle habits
The goal is not necessarily to determine why the insured died. The goal is to identify something the insurer can label a material misrepresentation.
Why Cause of Death Often Does Not Matter
One of the most misunderstood aspects of contestability denials is that the alleged misstatement does not need to relate to how the insured died.
An insured can die in a car accident, yet the claim may still be denied over:
• Smoking history
• Mental health treatment
• Alcohol consumption
• Body weight or BMI
• Recreational drug use
• Prior diagnoses that were stable or resolved
Insurers argue that the policy itself should never have been issued under the original terms. This allows them to rescind the entire contract rather than pay the death benefit.
Courts often view this argument skeptically, especially when the misstatement had no causal relationship to the death.
What “Material” Really Means in Contestability Disputes
A misrepresentation is not automatically material just because it exists. To justify a denial, insurers must show that the information would have changed the underwriting outcome.
That usually means proving one of the following:
• The policy would have been declined
• The premium would have been higher
• The coverage amount would have been lower
• Additional exclusions would have applied
Many contestability denials fail because insurers cannot produce underwriting guidelines that support their claim. Instead, they rely on general statements or post hoc rationalizations that do not hold up under legal review.
Partial Payouts and Adjusted Underwriting Arguments
In some cases, contestability disputes do not result in an all or nothing outcome.
If the insurer can show that the misstatement affected pricing but not eligibility, courts may require a proportional payout. This means the beneficiary receives the amount of coverage the insured would have qualified for had the application been accurate.
This is a critical concept that insurers rarely volunteer. Many beneficiaries are told the policy is void when, in reality, a partial benefit may be legally required.
Reinstatement Can Reopen Contestability Risks
Another overlooked issue involves reinstated policies.
When a policy lapses and is reinstated, insurers may argue that a new contestability period begins. Whether that is legally valid depends on the policy language and state law.
Some reinstatement applications ask health questions. Others do not. If no new representations were made, insurers often have limited grounds to reopen contestability. Despite this, many reinstatement based denials are issued automatically and only reversed when challenged.
The Refund Check Strategy
One of the most common tactics insurers use after denying a contestable claim is sending a premium refund check.
This is not a courtesy. It is a strategy.
Cashing the check may be treated as acceptance of rescission, effectively ending the dispute. Many families unknowingly forfeit their rights by depositing the refund before speaking to a lawyer.
Premium refunds should never be accepted without legal advice when a contestability denial is involved.
Why Early Legal Review Changes Outcomes
Contestable period denials are highly fact driven and extremely time sensitive. Insurers know that delays favor them, especially when beneficiaries are unfamiliar with underwriting standards and policy interpretation.
Early legal intervention allows attorneys to:
• Demand full underwriting files
• Compare denial reasons to internal guidelines
• Identify immaterial or unprovable misstatements
• Block improper rescission tactics
• Preserve rights before deadlines expire
Many contestability denials collapse once insurers are forced to justify their decisions with actual evidence rather than assumptions.
Do Not Assume the Insurer Is Right
A denial during the contestability period does not mean the insurer acted lawfully. It often means the insurer believes the denial will go unchallenged.
These cases are among the most technical and most winnable life insurance disputes when handled correctly. If your claim was denied within the first two years of the policy, the timing alone makes legal review essential.
We regularly overturn contestability denials that insurers insist are final. In many cases, the denial was based on weak evidence, improper underwriting logic, or a misunderstanding of the law.
If you are facing a contestable period denial, do not wait. The sooner the denial is challenged, the more leverage exists to recover the benefits your loved one intended you to receive.