The thread about USAA denying a claim due to the insured's material misrepresentation of a medical condition
https://insurance-forums.com/community/threads/colorado-springs-veteran-sues-usaa-for-denying-husband’s-1-million-life-insurance-policy.95920/page-4
raised the question as to whether an insurance company should or could be allowed to deny a claim on the basis of fraud even after the two year contestability period expired.
Comments were made that some states allow it, some companies have done it, some policies have it written into the contestability clause.
I hope that those who wish to participate in this discussion would contribute factual material rather than anecdotal material.
By factual material I mean a link to an appellate court decision regarding the issue in any particular state or upload a sample life insurance policy that includes the fraud wording in the contestability clause.
To that end let's start with a 2017 decision of the US Court of Appeals for the Second Circuit: AEI Life LLC, Plaintiff-Appelle v. Lincoln Benefit Life Company, Defendant-Appellant.
https://cases.justia.com/federal/appellate-courts/ca2/17-224/17-224-2018-06-08.pdf?ts=1528470006
The upshot of that decision is that:
That gives us two states:
New Jersey allows it.
New York doesn't.
MY question has to do with NY. IF after the 2 year incontestability period fraud is discovered regarding health will the Death Benefit be payed out?