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Insurance · Policy Provisions and Riders

What is the purpose of the 'incontestability clause' in a life insurance policy?

Reviewed by Jordan Morley, Editorial Lead at 247SimpleTests. Written by the 247SimpleTests Editorial Team from the official source material cited on every question.

Correct answer

After the policy has been in force for a specified period (commonly two years), the insurer generally cannot contest the policy or deny a claim based on misstatements in the application (except in cases such as fraud, depending on state law)

  1. A It lets the insurer cancel anytime
  2. B After the policy has been in force for a specified period (commonly two years), the insurer generally cannot contest the policy or deny a claim based on misstatements in the application (except in cases such as fraud, depending on state law)
  3. C It applies only to term policies
  4. D It allows unlimited contesting of claims

Why this is the answer

The incontestability clause provides that once a life insurance policy has been in force for a specified period — most commonly two years — the insurer can no longer contest the validity of the policy or deny a death claim based on misstatements or omissions in the application. This protects beneficiaries from having a long-standing policy challenged after the insured's death. During the initial contestable period, the insurer may investigate and contest based on material misrepresentation. The exact scope and exceptions (such as for fraud) vary by state, but the two-year incontestability standard is a widely tested policy provision.
Source: NAIC Model Outline, Incontestability

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About this topic: Policy Provisions and Riders

Policy provisions and riders cover the standard clauses — incontestability, grace period, reinstatement, misstatement of age, nonforfeiture options, settlement options — and the common riders such as waiver of premium and accidental death. This is one of 17 Life Insurance questions on policy provisions and riders, each with a full explanation on a single study page.

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