The original incontestable clause excluded nonpayment of premiums from its operation, and the practice has continued to the present. This exception is not only superfluous today, but it has also created confusion as to the applicability of the clause to matters not specifically excluded. Payment of the first premium, or the first installment of the first premium, is a consideration of the life insurance contract and is usually made a condition precedent. Unless this requirement is satisfied, there is no contract and hence no incontestable clause. If subsequent premiums are not paid, the contract does not fail as of its inception and may, in fact, continue in force under the nonforfeiture provisions.

This has not always been the case, however, and there was probably some justification for the inclusion of the exception in the original clause. Early policies contained no surrender values, and default in premium, even years after policy�s issue, resulted in avoidance of the contract from its inception. It is clear, though, that the termination or modification of a modern policy through nonpayment of premiums is not a contest of the policy. When an insurer denies a claim based on nonpayment of premiums it is, in fact, declaring the insurance contract valid and attempting to enforce one of the contract�s terms�specifically the contract�s requirement that the insurer�s obligation to pay is conditioned on the policyowner�s payment of premiums. Nevertheless, the historical precedent and the requirements of state statutes have made the exception a fixture.

The express exclusion of nonpayment of premium (and a few other conditions) from the operation of the incontestable clause has caused a minority of courts to apply the doctrine of expressio unius est exclusio alterius to a company�s attempts to avoid liability under other provisions of the policy. Under such a doctrine, if a particular hazard is not specifically excluded from the operation of the clause, a claim arising from that hazard cannot be avoided beyond the contestable period. This view arises from the idea that the incontestable clause precludes the insurer from disputing the obligations under the valid contract as well as disputing the validity of the contract.

For example, assume that the policy contains an incontestable clause that says, "This policy shall be incontestable after it has been in force during the lifetime of the insured, for a period of 2 years from the issue date, except for nonpayment of premiums." Assume that the policy also contains a war hazard exclusion clause. Since the incontestable clause refers to nonpayment of premiums as a permissible reason for contesting the policy but does not refer to the war hazard clause, a minority of courts prohibit the insurer from applying the war hazard exclusion if the insured dies after the time limit prescribed in the incontestable clause.

Sometimes an insurer may wish to exclude policy provisions or policy riders relating to disability and accidental death benefits from the operation of the incontestable clause. A typical clause containing these exclusions might read as follows: "This policy shall be incontestable after it shall have been in force for

2 years from its date of issue except for nonpayment of premiums and except as to provisions relating to benefits payable in the event of total and permanent disability and provisions that grant additional insurance specifically against death by accident."

If the courts could be relied upon to interpret the incontestable clause in accordance with its basic objective of protecting third-party beneficiaries, it would be unnecessary to specifically exclude disability and accidental death benefits from its scope. Unfortunately, the courts have had some difficulty in distinguishing between a contest involving the validity of the policy and one relating to the coverage of an admittedly valid policy. The distinction is a critical one in connection with disability and accidental death provisions since it is frequently difficult to determine whether a claim filed under one of these provisions is valid. In order to avoid any possible conflict with the incontestable clause in adjudicating such claims, some companies keep the provisions entirely outside the operation of the clause. Under the type of clause cited above, the validity of the provisions relating to disability and double indemnity can be attacked at any time, even after the expiration of the contestable period.

The general rule is that unless there is a specific exception in the policy�s incontestable clause, the disability and accidental death provisions are included within the incontestable clause. However, insurers may draft policy language that excludes those provisions from the scope of the incontestable clause. If such an exclusion exists, a majority of courts have upheld it, although many other courts have held otherwise.

The exclusion of disability benefits from the protection of the incontestable clause is not in conflict with the intent of the clause. The purpose of the clause is to forestall a contest over the contract�s validity after the insured is dead and cannot defend the representations he or she made in the application for insurance. Disability claims are filed during the lifetime of the insured, who can defend his or her actions, both at the time the policy was applied for and at the time of the claim.