Incontestability Clause

You buy a life insurance policy. Filling out the form, you accidentally list your age as 35 when you’re really 36.

Forty years pass. Eventually, you die during an ill-advised hang gliding stunt. The insurance company, going through your heirs’ claim, figures out that your age was listed wrong. They use the mistake as an excuse to void the policy. “Sorry,” they say, “the insured had a serious misstatement on official documents. Hope you enjoy poverty.”

That situation can’t happen with an incontestability clause. The provision bans companies from declaring a life insurance policy void due to a misstatement by the person buying the coverage. Usually, the incontestability clause kicks in after you’ve had the policy for a certain amount of time.