Life Insurance Learning Center - Contract Provisions
Incontestable Clause, Part 1
This provision is in most life insurance policies in most states.
The provision reads:
This policy shall be incontestable after it has been in force for a period of two years from date of issue...
The reason why this provision is in effect is to prevent life insurance companies from challenging the validity of a claim after the insured dies, two years or longer after the policy was issued.
Typically, the insured dies several years after a life insurance policy is opened. If the insurer contests, claiming that the policy is fraudulent, the beneficiary is at a loss here because he/she is already strapped financially, and therefore doesn't have enough money or energy for a lawyer or to engage in any legal battles.
This clause also gives rise to the prompt payment of the death benefit. This is a great relief to the beneficiary, for whom this provision was written for.
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