Why may an insurance policy be contested during the first years of the contract?

An insurance policy may be contested during the first years of the contract primarily to prevent fraud and misrepresentation. This initial period, often referred to as the contestable period, allows the insurer to thoroughly evaluate the information provided by the insured during the application process. If significant inaccuracies or omissions are discovered that could affect the risk assessment made by the insurer, they have the right to contest the policy.

This provision serves as a safeguard for the insurer, ensuring that they only underwrite policies based on accurate information. By allowing for a contest during this timeframe, the law aims to uphold the integrity of the insurance system, ensuring that claims are legitimate and that policyholders are honest about their health and other relevant factors.

While verifying the accuracy of the application and ensuring compliance with state regulations are important aspects of the insurance process, these are more about routine operations rather than specific reasons for contesting a policy. Allowing an insurer to change its terms during the contestable period does not align with the primary intent of the contestability provision. Instead, the focus is on preventing fraudulent claims and upholding the principles of good faith in the contractual relationship between the insurer and the insured.