Clause A clause in a policy providing that a policy has been in effect for a given length of time (two or three years), the insurer shall not be able to contest the statements contained in the application. In life policies, if an insured lied as to the condition of his health at the time the policy was taken out, that lie could not be used to contest payment under the policy if death occurred after the time limit stated in the incontestable clause. Indemnity Benefit vs. Cost Incurred Benefit An indemnity benefit is paid to the insured regardless of the actual costs of care. The stated daily benefit amount is paid in full in some long term care insurance policies even if Medicare payments are being received for the same care. A cost incurred benefit reimburses for actual costs up to the stated daily benefit amount. Policies will generally provide for either reimbursement of 80% or 100% of costs incurred up to the daily benefit amount.