What is an Incontestability Provision?
Normally, contracts can be voided or canceled at any time if they have been fraudulently enacted. Life insurance contracts are somewhat different because of a clause in the policy called the incontestability provision. Here, the company gives up its right to challenge the contract after a specified period (usually one or two years), and agrees that after this period, it will not deny claims even if serious misstatements were made in obtaining the insurance. The period during which claims are contestable provides the company a reasonable opportunity to protect itself against people getting insurance that they would not qualify for if they gave truthful information on their applications. It also provides the vast majority of honest policyholders the assurance that their policies will be honored.
