What is a ‘Contestability Period?’

A contestability period is standard on almost all life insurance policies and is the primary reason why you should never lie on a life insurance application. The contestability period gives insurance companies a period of time (usually 2 years) to investigate a claim on a policy following a death. If they find that information was falsified or otherwise misrepresented, they are free to either reduce the death payment to your beneficiaries or, in some cases, not pay at all.

The contestability period allows insurance companies to deny or reduce benefits if:

• It is discovered that you lied on your application
• If you fail to report any significant changes that have occurred in your life that could affect your health

• The circumstances surrounding your death are suspicious (suicide)
• There is suspicion of fraud by other means

Other insurance companies and policies, such as auto insurance may also have a contestability period attached to them. You should read any insurance policy carefully and thoroughly (perhaps even have it checked out by your lawyer) before signing it, so that you know exactly what you’re getting yourself into.

The contestability period and the possible repercussions of being found in violation of your life insurance policy is a good to check your policy on a regular basis throughout your life – at least once a year. This will serve as a reminder to report to your insurer any significant changes to your health or lifestyle that may change your policy and ensure that your loved ones are protected as you intended for them to be.