What Do I Need To Know About the Contestability Clause?

Frank Darras:

"The last thing most people think about when they're getting ready to file a claim is the information that they provided at application time. The carrier is going to look for two ways to eliminate your claim in total. Number one-- if you have a 2-year contestability clause, that means the carrier gets to look backwards in time. And if, during the first two years that the policy's in force, they can show that you materially misrepresented, they can rescind the policy, return the premiums, plus interest, and you're out."

"If they have an "except fraudulent misstatement" provision in the policy, 15, 20 years later they can come back and look at the financial, the occupational, and the medical information to see whether you materially misrepresented. And then they do the same thing. They return your premium, with interest, and the policy is null and void."

"So we always, at DarrasLaw, look at the application to see whether there was any misinformation. Did the agent or broker mishear, misunderstand, or misrecord the information? So we can beat the "except fraudulent misstatement" or the 2-year contestability clause."