A beneficiary clause is a provision in a life insurance policy or other investment vehicle such as an annuity or individual retirement account (e.g., an IRA), that permits the policy owner to name individuals as primary and secondary beneficiaries.

What is Incontestability?

Incontestable Clause — a clause in a life or health insurance policy that stipulates a given length of time (usually 2 years) during which the insurer may contest claims. After expiration of this time, claims cannot be contested for any reason other than nonpayment of premium.

How does the incontestability clause in life insurance work?

Although the contestability period helps protect the insurance company from monetary loss due to false claims, the incontestability clause works in favor of the insured. By limiting the contestability period to a certain amount of time, the likelihood that you will fall prey to an insurer trying to deny your claim is much lower.

Are there any exceptions to the incontestability clause?

Three Common Exceptions to the Incontestability Clause. In most states, if the insured person misstates age or gender when applying for life insurance, the insurance company may not void the policy, but it can adjust death benefits to reflect the policyholder’s true age.

What is the contestability period in life insurance?

This two-year period is known as the “contestability period.” The one exception to this clause is a misstatement of age or gender. If an insured lies about their age or gender on a life insurance application, the death benefit payout or premiums can be altered at any time during the contract to reflect the insured’s actual age or gender.

Is the contestability period the same as the suicide clause?

The contestability period is a separate issue from the suicide clause. Almost all life insurance policies have a suicide clause. It often gets confused with the contestability period, but the two are separate issues.