3.9.8 The Incontestable Clause
The incontestable clause places a time limit (usually two years) in which the insurer can dispute a policy based on the validity of statements made on the original application. This clause was designed to protect the beneficiary if the insurance carrier attempts to deny payment of a death claim. Once the two-year period has passed, the insurer cannot challenge the application based on material misrepresentation, fraud, or concealment and cannot hold up payment.
However, there are three situations in which the incontestable clause is not applicable.
- Impersonation
- A lack of insurable interest
- The intent to murder
