Non-Contestability Clause Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Non-Contestability Clause, written in plain English, along with examples of how it is used.
What is Non-Contestability Clause?
n.Condition made in insurance policies where the insurance companies can refuse to make payments to policy holhders when they feel that the claim is not genuine but because of dishonest means or false information in the application.
History and Meaning of Non-Contestability Clause
The non-contestability clause, also known as the incontestability clause, is a common feature of life insurance policies. It was introduced to provide protection to policyholders by ensuring that their claims would be paid out as long as they had met certain conditions such as paying their premiums on time, and that the policy had been in effect for a specified period of time. This clause protects the insured from unfair cancellation of their policy and ensures that the insurance company cannot deny a claim for issues that existed before a specified period.
Examples of Non-Contestability Clause
A life insurance policy includes a non-contestability clause that states that after the policy has been in effect for two years, the insurer cannot deny a claim based on any material misrepresentations made in the application.
In a disability insurance policy, the non-contestability clause states that after the policy has been in effect for one year, the insurer cannot deny a claim based on any pre-existing conditions.
The non-contestability clause in a health insurance policy may state that after a certain amount of time, such as 90 days, the insurer cannot deny a claim based on certain pre-existing conditions.
Legal Terms Similar to Non-Contestability Clause
- Grace Period - A grace period is the amount of time a policyholder has to make a payment without penalty, usually 30 days.
- Beneficiary - A beneficiary is the person or entity designated to receive the proceeds of a life insurance policy.
- Material Misrepresentation - A material misrepresentation is a false statement made by the policyholder that would have changed the underwriting decision of the insurer.