Sunday, September 27, 2015

Incontestability clause under a life insurance policy

Life Insurance Association
Member Undertaking No. 53 4 February 2010

The requirement for an incontestability clause is neither a statutory provision nor a regulatory directive.
However it is an LIA members' undertaking since December 1991.
1. Insurers must have such a clause in their policy contracts.
2. The incontestability clause applies to Life policies as defined under the Insurance Act, and to Critical Illness policies.
3. For all other types of benefits, applicability of the clause is at the insurer’s discretion (i.e. on company policy basis).
4. Further, for all policies previously sold (before Dec 1991) without the incontestability clause, claims would not be rejected except for fraud, non-payment of premium or exclusions stated in the policy after it has been in force during the life time of the Life Assured for *one or two years (whichever is applicable) from the commencing date or re-instatement, whichever is later. *The insurer determines the duration, whether to be one or two years.

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