The principle
After two years of the contract being continuously in force, the insurer generally can no longer invoke a misrepresentation or concealment to refuse the benefit. It is a protection for the insured and the beneficiaries.
The fraud exception
The period does not apply in cases of fraud. An intentional misrepresentation remains contestable after two years; the line between error and fraud is assessed on the facts.
What the period does not change
It does not validate an exclusion written into the contract. An exclusion — certain risks, certain activities — remains enforceable for the whole life of the contract, however much time has passed.
The suicide clause
Most contracts provide an initial period, often two years, during which death by suicide is not covered or gives rise only to a refund of premiums. This clause is separate from the contestability period.
Replacing restarts the clock
Cancelling a contract to take out a new one restarts the period, and sometimes the suicide clause. One more reason to review a replacement with a registered advisor rather than doing it yourself.
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