The life insurance contestability period is a short window in which insurance companies can investigate and deny claims.
The period is two years in most states and one year in others, and it begins as soon as a policy goes into effect.
If you die within the contestability period, the life insurance company can investigate whether you gave accurate information on your life insurance application. The company can deny paying the death benefit if you lied -- even if the cause of death has nothing to do with misrepresentation on your application.
The contestability of life insurance policies became an issue in the mid-19 th century, says Stephen Rothschild, chair and executive committee member of the LIFE Foundation, an industry group that educates consumers about life, health and disability insurance. States passed laws to prevent life insurance companies from refusing to pay benefits just because customers made mistakes on their applications. Life insurers then included clauses in their policies saying they could not contest claims except during the contestable period."Insurers have to go after these cases when there's fraud or more people would try [to cheat], and prices would increase for everyone," Rothschild says. Here are seven things to know about the contestability period.