What Is the Contestability Period?
The contestability period is typically the first two years after a life insurance policy is issued. During this time, the insurance company has the right to investigate claims and potentially deny or rescind (cancel) the policy if they find material misrepresentations on the application.
This provision exists to give insurers protection against fraud while still providing certainty to policyholders after the period ends. The idea is simple: insurers have two years to investigate; after that, they largely lose the right to contest the policy.
Life Insurance Contestability Timeline
Why Does This Matter?
If the insured person dies within the first two years of the policy, the insurance company will almost certainly investigate the application thoroughly. They will look at medical records, pharmacy databases, and other sources to see if the applicant disclosed everything accurately.
If they find any discrepancy - even an innocent one - they may attempt to deny the claim or rescind the policy entirely. This is why contestability period denials are among the most common life insurance disputes.
What Insurers Investigate During Contestability
When a death occurs within the contestability period, insurers conduct extensive investigations looking for any discrepancy between the application and the actual facts. Common targets include:
| Application Question | What Insurers Look For |
|---|---|
| Medical history | Undisclosed diagnoses, doctor visits, hospitalizations, or treatments |
| Tobacco/nicotine use | Pharmacy records, medical notes, nicotine tests at time of application |
| Alcohol/drug use | DUI records, treatment programs, medical notes about substance use |
| Prescription medications | Pharmacy databases showing medications not disclosed on application |
| Dangerous activities | Evidence of skydiving, scuba diving, aviation, motorsports, etc. |
| Occupation/income | Whether job duties or income were accurately represented |
| Other insurance | Whether other policies existed that should have been disclosed |
The MIB Database
- Most insurers share information through the Medical Information Bureau (MIB)
- The MIB contains coded information about prior applications and medical conditions
- If something appears in MIB that was not disclosed, insurers will investigate
- You can request your own MIB report at mib.com
What Happens After Two Years?
Once the contestability period ends, the policy becomes "incontestable." This means the insurer generally cannot deny a claim based on statements made in the application - even if those statements were false.
The incontestability clause is a powerful protection for beneficiaries. It provides certainty that after two years, the insurer cannot dig through medical records looking for any excuse to deny the claim.
Exceptions to Incontestability
While the incontestability clause is strong, it has important exceptions. Even after two years, insurers may still be able to contest or deny claims in certain situations:
Non-Payment of Premiums
If premiums were not paid and the policy lapsed, there is no coverage regardless of how long the policy was in force. The incontestability clause does not apply to lapse defenses.
Lack of Insurable Interest
If the policy was obtained without proper insurable interest (e.g., a stranger-originated policy), some courts allow this defense even after the contestability period.
Fraud in the Procurement
Some states allow insurers to void policies for fraud even after two years, though the burden of proof is much higher. This typically requires proving intentional deception.
Imposter Fraud
If someone other than the named insured took the medical exam or signed the application, the policy may be void regardless of the contestability period.
California Insurance Code Section 10381 provides strong incontestability protection:
- After two years, the policy is incontestable "except for nonpayment of premiums"
- California courts have interpreted this strictly in favor of beneficiaries
- The fraud exception is narrower in California than in some other states
- Reinstatement may restart the contestability period for new coverage amounts
Fighting a Contestability Period Denial
If your claim was denied based on alleged misrepresentation during the contestability period, you may still have grounds to fight. Insurers do not automatically win these disputes.
Defenses Against Rescission
- The statement was not false. Medical records can be incomplete or contain errors. What the insurer claims was omitted may actually have been disclosed or may not have existed.
- The misrepresentation was not "material." Even if something was omitted, if the insurer would have issued the same policy at the same rate, the misrepresentation is not material and cannot support rescission.
- Lack of intent to deceive. Many states require proof that the applicant knew the statement was false and intended to deceive the insurer. Innocent mistakes or misunderstandings are not grounds for rescission.
- Agent knowledge. If the insurance agent knew the truth but filled out the application incorrectly, the insurer may be charged with that knowledge.
- Waiver or estoppel. If the insurer had information that should have raised questions but issued the policy anyway, they may have waived the right to rescind.
Evidence to Gather
- The original application (including any telephone interview recordings)
- All medical records from before the application was submitted
- Any underwriting guidelines the insurer uses
- Evidence of what the agent told the applicant or wrote on their behalf
- The insurer's claim investigation file
Special Contestability Situations
Policy Reinstatement
If a policy lapses and is later reinstated, the contestability period may restart for the reinstated policy. This means if the insured dies within two years of reinstatement, the insurer can investigate the reinstatement application.
Policy Conversion
When a term policy is converted to permanent insurance, whether a new contestability period begins depends on state law and policy terms. Some policies provide that conversion does not restart contestability if no new medical information was required.
Increased Coverage
If the death benefit is increased after the policy is issued, the new contestability period typically only applies to the increased amount, not the original coverage.
Under California law, when a policy is reinstated, the new two-year contestability period applies only to statements made in the reinstatement application - not to the original application statements (which may already be incontestable).