When a life insurance policy includes an incontestable clause, how long must the insurer wait before denying a claim based on misrepresentation?

When a life insurance policy includes an incontestable clause, the insurer is required to wait a specific period, typically two years, before it can deny a claim based on misrepresentation or concealment of information by the insured. This two-year period is designed to provide a measure of protection for the insured and ensures that, after the policy has been in force for this duration, the insurer cannot contest the validity of the policy or the validity of claims arising from it based on earlier misrepresentations.

The rationale behind the incontestable clause is to provide policyholders with peace of mind, knowing that they have a two-year window during which their claims will not be scrutinized to the same degree for potential misrepresentations. After this period, the insurer has the right to investigate and can contest claims based on misrepresentation, but until that time, the policy is considered secure.

This provision helps encourage individuals to purchase life insurance without the fear that an innocent mistake in their application could lead to a denied claim in the future. The two-year period is widely accepted in the insurance industry and is stipulated in many state laws, including Virginia's regulations regarding life insurance policies.