Incontestability Clause

[u18247]

Think how much less life insurance would get sold if companies went around contesting policies past the 2nd year. The public would think of it like individual health insurance (right or wrong, people think health insurance is recended improperly.)
Some companies would issue anything and challenge it later if they could. Even with only two years to challenge certain companies do very little to verify upfront with FE policies.

You are right. The 2 year contestability is there for the good of the public and to keep these things out of court. Again, I can find no case where a company denied benefits outside the 2 year period for lying about health etc. A companymay try this one day to make an example out of someone. That is true. It is also true, in my opinion, they would lose the case.

 

[jaranshe]

Guys,
Here is the Louisiana statute. Looks like there is no fraud exclusion in LA beyond contestability period.

(2) Incontestability. A provision that the policy shall be incontestable after it has been in force during the lifetime of the insured for a period of two years from its date of issue, except for nonpayment of premiums and except for the conditions of the policy relating to military or naval service, or services auxiliary thereto; and at the option of the insurer, provisions relating to benefits in the event of disability, as defined in the policy, and provisions which grant additional insurance specifically against death by accident or accidental means, may also be excepted.

 

[GoCubsGo]

Guys,
Here is the Louisiana statute. Looks like there is no fraud exclusion in LA beyond contestability period.

(2) Incontestability. A provision that the policy shall be incontestable after it has been in force during the lifetime of the insured for a period of two years from its date of issue, except for nonpayment of premiums and except for the conditions of the policy relating to military or naval service, or services auxiliary thereto; and at the option of the insurer, provisions relating to benefits in the event of disability, as defined in the policy, and provisions which grant additional insurance specifically against death by accident or accidental means, may also be excepted.

Hi jaranshe, welcome to the forum.
You have added to a conversation that ended in the beginning of 2011. You will see a date at the top of each post and the last post before yours was 2/15/2011

 

[jaranshe]

Yes I realized that when I posted. I wanted to put the LA information out there for interested folks. Interestingly, my insurance company put a slightly different/ambiguous language.

We will not contest this Policy after it has been in force during the Insured's lifetime for two years from the Issue Date, except for failure to pay premiums or fraud in the procurement of the Policy (when permitted by applicable law in the state the Policy is delivered for issuance).

Dont know if this is more restrictive than LA language. Any thoughts?

 

[Guest]

In the mid 1990's, I had two Non-Can DI policies rescinded for "fraud" after the 2 year incontestability period. My so called fraud was that I didn't disclose on the non-med apps that I had seen a Psychiatrist for Panic Disorder & Clinical.Depression. I had no history of hospitalizations or suicide thoughts or attempts. A third policy did pay my claim for 5 years on that policy.

It has made me forever suspicious about even life insurance incontestability, and whether my now 3 year old $150,000 GUL policy will pay out, even though I discosed everything on that one.

 

[Newby]

In the mid 1990's, I had two Non-Can DI policies rescinded for "fraud" after the 2 year incontestability period. My so called fraud was that I didn't disclose on the non-med apps that I had seen a Psychiatrist for Panic Disorder & Clinical.Depression. I had no history of hospitalizations or suicide thoughts or attempts. A third policy did pay my claim for 5 years on that policy.

It has made me forever suspicious about even life insurance incontestability, and whether my now 3 year old $150,000 GUL policy will pay out, even though I discosed everything on that one.

LIFE insurance is non-contestable after two years. Not health insurance.

Disability falls under health insurance doesn't it?

 

[Jerard]

Disability falls under health insurance doesn't it?

In Florida it does. You never know about your states.

 

[jaranshe]

Arkansas law. FYI.

23-81-105. Life insurance — Incontestability provision.

There shall be a provision that, except for fraud in the procurement, the policy, exclusive of provisions relating to disability benefits or to additional benefits in the event of death by accident or accidental means, shall be incontestable, except for nonpayment of premiums, after it has been in force during the lifetime of the insured for a period of two (2) years from its date of issue. However, at its option, the insurer may omit from the provision the phrase "except for fraud in the procurement".

 

[Guest]

Back in the mid 1990's, when my 2 DI policies were rescinded for "fraud" well after 2 years in force, the incontestability clause was the same wording as was used in life policies. I asked the 2 claims managers how the incontestable clause could be legally ignored, and they responded that any contract can be revoked for fraud regardless of how long it was in effect.

I didn't have any money for a lawyer to fight them over how my omission about seeing a Psychiatrist could rise to the level of fraud. I just hope that no bogus loophole is used on my life insurance claim many years hence (I hope), when I'm not here to fight it.