The 26th Month: Suicide, Incontestability, and an Omitted Cardiac History
Marcus, 51, applied for a $750,000 20-year level term policy in March 2023 and answered 'no' to the question asking about hospitalizations or treatment in the previous five years. In fact he had been treated for atrial fibrillation 18 months earlier. The policy was issued at standard rates, delivered in April 2023, and every premium since has been paid on time. In June 2025 - the 26th policy month - Marcus dies of an intentional overdose. His spouse, the named beneficiary, files the claim. Claim review discovers the omitted cardiac treatment and flags the manner of death on the death certificate. The policy contains a two-year suicide clause and a two-year incontestability clause. There has been no lapse and no reinstatement.
1. Must the insurer pay the $750,000 face amount? Explain how the suicide clause and the incontestability clause interact on these facts.
Read the worked answer
Yes - the face amount is payable.
- The two-year clock on both provisions runs from the policy's issue date (April 2023), not from the date of application or delivery of a conditional receipt.
- Death occurred in month 26, so the suicide clause has expired. Beyond the stated period, suicide is paid exactly like any other cause of death; the insurer cannot refund premiums and walk away.
- The incontestability clause has also expired. After two years the insurer generally cannot rescind the contract or deny the claim because of a misstatement in the application, regardless of how material the omitted atrial fibrillation was. Misstatement of age or sex is handled by adjusting the benefit, not by rescission, and nonpayment of premium remains contestable.
- Practical caveat for the producer: a small number of contracts and state statutes carve out fraud that would have prevented issuance entirely. Verify the exact contract language, but on these facts the default answer is payment.
Key judgment: the insurer's discovery that it would have rated or declined the risk is legally irrelevant at month 26. Timing, not materiality, controls.
2. Suppose instead Marcus had died by suicide in month 18. What could the insurer do, and what would the beneficiary actually receive?
Read the worked answer
At month 18 the insurer has two independent defenses, and it only needs one:
- Suicide clause. Within the two-year window the insurer's liability is limited to a refund of premiums paid (some contracts add interest). The beneficiary gets roughly the $5,000–6,000 of premiums, not $750,000.
- Contestability. The policy is still contestable, so the insurer may rescind for the misrepresentation if it can show the omission was material - that a reasonable underwriter would have declined, rated, or excluded. Atrial fibrillation with treatment 18 months before application is a strong materiality case.
The insurer cannot rescind and invoke the suicide limitation to keep premiums under a void policy - either path returns the premium dollars. The beneficiary's counterargument is that the condition was controlled and would not have changed the offer, shifting the burden onto the insurer to prove materiality.
Key judgment: the earlier the death, the more leverage the insurer has. Advise applicants that an omission bought at underwriting can be used against the family for two full years.
3. Now assume the policy lapsed for nonpayment at month 14 and was reinstated at month 16 after a signed statement of good health, with no new medical evidence required. Marcus dies by suicide in month 26. Does the beneficiary receive the face amount?
Read the worked answer
No - the beneficiary receives a refund of premiums.
- Standard reinstatement provisions restart the suicide period (and, in most forms, the incontestability period) from the reinstatement date. Month 26 is only about 10 months after reinstatement, so the death falls inside a fresh two-year suicide window.
- The reinstatement application is also a new statement of insurability, so the omitted cardiac history is contestable again.
- Verify the contract language: a minority of forms measure the suicide period from original issue, and the reinstatement provision controls. That is exactly the sentence a producer should read before telling a client that reinstatement 'puts everything back the way it was.'
Key judgment: reinstatement restores coverage but does not restore the original clocks. For a client with any suicidal risk factors or a recent lapse, the practical advice is to keep the policy in force, not to let it lapse and revive it.