Contestability

Contestability refers to the period of time after an insurance policy is issued during which the insurer has the right to review and investigate the accuracy of the information provided in the application. If the insurer discovers that any information was omitted, misstated, or misrepresented during this period, it can deny a claim or void the policy.

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In most Canadian life and health insurance policies, the contestability period lasts two years from the date the policy takes effect. During this time, the insurer can contest a claim based on errors or nondisclosure in the application, even if the omission was unintentional. Once the contestability period has expired, the policy generally becomes incontestable except in cases of fraud.

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Contestability protects insurers from inaccurate disclosures while ensuring fairness to honest applicants who provide complete and truthful information. It also reinforces the importance of accuracy during the underwriting process.

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Example:

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If you apply for a life insurance policy and fail to disclose a serious medical condition, and you die within the two-year contestability period, the insurer may investigate and deny the death benefit if it determines that the omission affected the underwriting decision.

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What to Watch For:

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Always provide complete and accurate information on your application to avoid claim disputes. Even minor inaccuracies can trigger a review if a claim occurs during the contestability period. Keep a copy of your application for reference, as insurers rely on the original answers when assessing eligibility and claims.