Q: How Does The Suicide/Incontestability Clause Work?
The Suicide/Incontestability Clause is applicable on every term policy and relates to those individuals that misrepresent or lie on the application about issues that would have caused them to be declined if that information had been properly disclosed. The two year suicide clause is very simple. If a person commits suicide during the first two years of the policy period, the death benefit will not be paid. The company will simply return the premium that was paid to the insured’s estate and no benefits will be paid. After 2 years there is no limitations and a death by suicide would be fully covered.
The Incontestability clause also applies during the first two years and allows an insurance company the right to verify the accuracy of the information provided during the application/underwriting process of the policy. If there were material misrepresentations regarding information that would have caused the company to decline coverage, no death benefit would be paid and all premiums paid would be returned. Once a policy remains in force past the first two year period, the company typically has no recourse and will pay the policy benefits to the beneficiary.