The contestability period, which is often around two years, is a period during which the insurer can cancel coverage and return payments if the insured is believed to have lied on their application. This means, claims made during this period will likely be closely examined to see if there is any possibility for denial of payment.
According to FreeAdvice.com, insurers are particularly nit-picky during this period so any untruth told, however small, will likely be uncovered. This means that something simple like denying that you used to smoke in the past can lead to the cancellation of your coverage. In this sense, telling a lie will cost you more than had you just told the truth.
Sure, you may have had a reduced price for premiums. But, what use is that when a claim is ultimately rejected or the whole policy is declared void? Something such as not disclosing a risky hobby, like skydiving, can result in your beneficiaries never seeing a penny of that insurance.
During the contestability period, both outright lies (positive misrepresentation) and omitted information (negative misrepresentation) qualify as basis for a claim rejection and voiding of the contract.