Background
The insured lied about his HIV status and sent someone else to the paramedical exam. The examiner noted the person was four inches taller and 30 pounds heavier than the application stated and produced no ID. The insurer issued the policy, collected premiums for over two years, and denied the claim after the death, citing the impostor.
What the court held
The California Supreme Court explained that the incontestability clause works like a statute of limitations: it does not condone fraud, but it gives the insurer a fixed window to raise it. Because the named insured personally applied, the insurer intended to insure him and the policy was not void from the start. The impostor at the exam was a fraud like other frauds the clause covers, and the insurer could no longer raise it after the two years. The court stressed that the insurer could have caught the problem easily at the outset, and it declined to decide whether California recognizes the impostor defense where an impostor both applies and is examined.
Why it matters
Amex is a strong statement of why incontestability exists: beneficiaries should receive benefits, not a lawsuit, once premiums have been paid through the contestable period. Exceptions such as no insurable interest at inception (see PHL Variable v. Price Dawe) are narrow, and the law differs from state to state. Our contestability guide covers the statutes.
Read the opinion
Amex Life Assurance Co. v. Superior Court, 14 Cal.4th 1231 (1997) (Justia).
Not legal advice. This page summarizes general rules and the specific statutes cited. Your policy's wording, the state whose law applies, and whether the coverage came through an employer can all change the result. See the disclaimer and editorial policy.