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Incontestable Clause, Part 3
Because common law does apply to life insurance companies and their respective provisions, courts can rule that insurers do not have to pay a claim under certain conditions. For example, if the supposed insurer took out a policy but had someone else take the physical exam and open the actual life insurance policy, then there would be no insurable interest at the time of the insurance policy origin; therefore, the policy can be stated as void.
Also, some life insurance companies have a clause in their policies which states that they will not pay the death benefit if the premiums are not being paid. So, even after the incontestable period is over, the insurer doesn't have to pay and it's not considered a contest. The life insurance company is simply following its own life insurance company policies and agreements.
In addition, if the provision does not contain the phrasing "during the lifetime of the insured", then the beneficiary can withhold his/her claim until the incontestable period is over. Life insurance companies can do nothing about this.
Grace Period
Incontestable Clause
Incontestable Clause, Part 2
Incontestable Clause, Part 3
Incontestable Clause, Part 4
Life Insurance Learning Center Home
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