Home / Money / Personal Finance /  Insurers can reject policy claim during the contestability period

My friend bought a life insurance policy two years back and recently died in a car accident. The insurer rejected his claim on the basis of the contestability period. What is this clause? We haven’t heard of it ever when buying a life insurance. Please explain. Also, is there a way to get the claim benefit?

—Name withheld on request


The contestability period is the time period within which an insurer can dispute any non-disclosure by the policyholder. After this period, the insurer’s right to reject a claim on the grounds of non-disclosure becomes weak, unless the insurer can prove it was an outright fraud.

An example of non-disclosure can be the smoking status of the policyholder.

If a person smokes, but declares otherwise, he would save premium upfront. However, at the time of claim, if this fact is discovered by the insurer, it has a right to reject this claim. You need to understand the fact, most likely medical related, that the insurer is disputing. Also, if that fact was disclosed at the proposal stage, would it have any impact on the basic underwriting decision or was it linked to the cause of death. If not, then you can re-represent your claim. However, if there is a fundamental linkage of the medical issue to the cause of death, then the rejection is valid. For example, a smoker dying from lung cancer.


If a policyholder gets murdered by someone, will the insurer pay claim to beneficiaries?

—Name withheld on request


Life insurance policies cover all kinds of death. The reason for death could be accidental, natural or murder. Only suicide is excluded under life insurance and that, too, for the first year. In the event of death, the full sum assured gets paid out to the nominee.

Do note that depending on the type of death, the document requirements vary. A claim form and a death certificate are common requirements. In the case of natural death, the insurer would also ask for hospitalization reports, if any. For death caused by accident or murder, insurers may insist on a police first information report (FIR) and a post-mortem certificate as well.

Abhishek Bondia is principal officer and managing director,

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