The Truth about Life Insurance Contestability Period

The life insurance contestability period is the duration of time used by your life insurance company to determine whether your family will receive your death benefits or not. It typically lasts for two years and begins from the day you buy your life insurance policy.

It is different from the suicide clause

Most people believe that the contestability period and suicide clause are the same thing. However, this view is quite wrong. Let’s assume that a man commits suicide within the first two years of his life insurance policy. Under the suicide clause, the insurance company will only return the premiums to his beneficiary. No death benefits will be paid out to his next of kin. This is in contrast to the contestability period which ensures that death benefits are paid to surviving relatives.

It can put your loved ones at risk

If you die during the contestability period, your life insurance company is required by law to investigate the cause of your death. Now, assuming the company discovers that you lied or presented false information while filling out your life insurance application, your death benefit will not be paid to your family. Therefore, we advise that you do not withhold information or lie to get inexpensive coverage. On the other hand, if your details are true, your dependents will receive your death benefits.

It can put you in trouble

Even if you live beyond the contestability period, you could still get in trouble for providing wrong information on your life insurance application. Most life insurance companies will view your action as a deliberate act of fraud and will certainly charge you to court.

It can be restarted

There are situations where your life insurance policy might expire because of your inability to pay your premiums. If you decide to renew the policy, you are automatically given an additional two year contestability period. Also, when you transfer the cash value of your permanent life insurance plan into a fresh plan, you will get a new contestability period.