Life Insurance Claims and the Contestability Period

When you file a life insurance claim, the timing of the policyholder’s death can have a significant impact on how the insurer reviews the claim. Most life insurance policies include a “contestability period,” typically the first two years after the policy is issued. During this time, insurers have the right to scrutinize the policyholder’s application and investigate claims more thoroughly. While the contestability period is not meant to deny legitimate claims, it can lead to delays and additional paperwork. In this blog, we’ll explain what the contestability period is, how it affects life insurance claims, and what beneficiaries can do to navigate the process and ensure a successful payout.

What Is the Contestability Period?

The contestability period is a limited timeframe—usually two years—starting from the date a life insurance policy is issued. If the policyholder dies within this period, the insurance company is allowed to review the original application and verify that all information provided was accurate and complete. The goal is to prevent fraud and ensure that the insurer issued the policy based on truthful information.

It’s important to note that the contestability period doesn’t mean claims will automatically be denied. Instead, it gives the insurer the right to investigate and, if discrepancies are found, to potentially deny the claim on those grounds. Once the contestability period ends, the insurer generally cannot contest the policyholder’s statements unless there is evidence of outright fraud.

How Does the Contestability Period Affect Claims?

When a claim is filed during the contestability period, beneficiaries may face additional steps and delays, including:

1. A More Thorough Review of the Application

The insurer will carefully review the policyholder’s original application, including medical records, lifestyle disclosures, and other details. They will compare this information to the cause of death and any new information that comes to light.

2. Requests for Additional Documentation

Beneficiaries may be asked to provide additional documents, such as the policyholder’s complete medical history, statements from doctors, or other supporting records. These requests can slow down the claims process and require extra effort from the beneficiary.

3. Potential Denial for Misrepresentation

If the insurer discovers that the policyholder omitted key information or provided false statements—such as failing to disclose a pre-existing condition or understating smoking habits—they may deny the claim. The insurer’s justification would be that they issued the policy under false pretenses.

4. Delays in Payout

Even if the claim is ultimately approved, the investigation process can lead to delays in receiving the payout. This can cause financial stress for beneficiaries who are relying on the funds for final expenses, mortgage payments, or daily living costs.

What Can Beneficiaries Do During the Contestability Period?

If you find yourself navigating a life insurance claim within the contestability period, there are several steps you can take to improve your chances of a successful outcome:

1. Gather All Relevant Documentation

Start by collecting all the documents the insurer may need. This includes a certified death certificate, medical records, and any correspondence between the policyholder and the insurance company. The more prepared you are, the faster the insurer can review your claim.

2. Respond Quickly to Information Requests

If the insurer asks for additional records or clarification, respond as promptly as possible. Delays in providing requested information can prolong the claims process. Keep track of all communications and follow up regularly to ensure the insurer has everything they need.

3. Consult an Experienced Life Insurance Attorney

If your claim is denied or you encounter significant delays, consulting a life insurance attorney can be a wise move. An attorney can review the insurer’s reasoning, identify weaknesses in their case, and help you present a strong appeal. They can also ensure that the insurer is acting in good faith and not using the contestability period as a pretext to deny legitimate claims.

4. File an Appeal if Necessary

Should the insurer deny your claim, you have the right to appeal their decision. Work with your attorney to gather additional evidence, present a compelling case, and challenge the insurer’s findings. Many claims that are initially denied during the contestability period can be successfully overturned on appeal.

What Happens After the Contestability Period Ends?

Once the contestability period expires, the insurer’s ability to challenge claims based on application misstatements is greatly limited. If the policyholder dies after this period, the insurer can only deny the claim for reasons explicitly stated in the policy (such as exclusions for certain activities) or if fraud is proven. For most beneficiaries, this means a smoother and faster claims process after the two-year window closes.

It’s important to note that even after the contestability period, beneficiaries should keep detailed records and respond promptly to any insurer inquiries. While the process is generally less complicated, having organized documentation can help ensure a swift payout.

Understanding Your Rights During the Contestability Period

Filing a life insurance claim during the contestability period can involve additional scrutiny and potential challenges, but it’s important to remember that you have rights as a beneficiary. By staying organized, responding quickly to requests, and seeking legal assistance if needed, you can navigate the process and often improve your chances of receiving the benefits your loved one intended for you. If you’re facing delays or denials during the contestability period, contact the Law Offices of Jason Turchin today for a free consultation. Our experienced life insurance lawyers can guide you through the process, help you appeal denied claims, and ensure you receive the financial support you deserve.