how incontestability clauses help consumers
errors are easy to make when applying for life insurance an insurance company will often require a complete medical history before the policy is approved if an applicant forgets a single detail the insurance company has potential grounds to deny paying life insurance benefits later on reputable insurance companies originally introduced the incontestability clause in the late 1800s to build consumer trust by promising to pay full benefits after the policy has been in place for two years even if there were errors in the original application these insurance companies tried to clean up the industry s image the effort was successful and early in the 20th century state governments began to pass laws requiring the incontestability clause 1today the clock immediately begins to run on the contestability period as soon as a life insurance policy is purchased if after two years the insurance company hasn t found an error in the original application benefits are assured even within that period it s not easy for the company to rescind a policy under most state laws the insurance company must file suit in court to nullify a contract sending a notice to the policyholder is not enough 