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Life Insurance Learning Center - Contract Provisions

Incontestable Clause, Part 3

Some insurers have a clause in their policy that states that the death benefit will not be paid if the premiums are not paid. Therefore, if after the incontestable period is over, the insurer decides to not pay, it is not a contest because the insurance company is simply following the terms of their own life insurance agreements.

If the phrase "during the lifetime of the insured" is not included when including the incontestable provision in a life insurance policy, then the beneficiary has the ability to withhold the claim until the incontestable period has expired. The life insurance company (the insurer) has no legal claims whatsoever in this case.

Sometimes, insurers will include two extra provisions as amendments to this clause. They are:

a. "except to any provision relating to benefits in the event of total and permanent disability"
b. "except as to any provision relating to benefit by reason of death by accidental means"

Insurers usually include these provisions so that they can defend their rights in a double indemnity or total disability claim. Sometimes, this can backfire, and insurers can lose money because it seems as if no contests can be made against ANY claims except those in the amendment. However, a lot of life insurance companies still use them anyway.

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