A Life Insurance Policy Normally Contains

Have you ever wondered what a life insurance policy normally contains? Is it your first time looking into life insurance? If so here are the normal parts of a life insurance contract.

Insurance contracts of all kinds are legal contracts between you and an insurance carrier and insured or policyholder. While legal contracts of any sort are rather dry and maybe boring(unless you like legal speak) it is a good idea to at the least scan your contract to ensure you have gotten the protection you were looking for while knowing the limitations and expectations to uphold on both parties behalf.

Parts of an insurance policy

Declaration page

While not always only a single page, this section is a summary of the policy details. It is usually the first part of a contract for easy reference. Things that it should include are:

Name of coverage, Policy details (such as premium, period, etc), Names of people and assets covered, Coverage amounts and deductibles, any discounts applied, and endorsements to be included.

Examples within a life insurance policy normally contain the person’s name like Joe Smith is covered for $250,000.

Something good to recall at this point is that most policies have some length of free look period so if things are not what you expected contact your agent or insurance carrier and get them corrected.

Have you ever wondered what rules there are for a beneficiary, take a look at this article and see if you were correct.

Definitions

As the word implies this section clarifies the terms used within the contract so no ambiguities arise. Words or phrases listed here may have italics or bold font throughout the rest of the contract so you more easily know they have special meaning and can easily check the definitions to find out what they are. Words listed here have very specific meanings while others that arent is more open to interpretation.

Insuring agreement

This is where we start getting into the policy itself, this being the primary section of it. This part defines who is covered and with what kind of coverage. In addition, it explains what the insurer will do and for what kind of premium requirement.

It will cover what type of damage or loss will be paid for such as property damage, bodily damage, or loss of life. There will be a part within this section that’s got some sort of “Coverage” title that lets you know this is where your coverage values are described.

Most policies insuring agreement section starts with a broad overview of your coverage and then narrows everything down within the definitions and exclusions sections. If you don’t read any other part of your contract these are the three that you should make sure to be acquainted with to know what is covered and what isn’t.

Further clarification regarding the insuring agreement can be explained in two types: all risk coverage and named risk peril coverage. So the types of risks listed in this section will be covered while all others will not be. If it’s all-risk coverage then it will describe it as such(except the exclusions listed of course).

Exclusions section

This section is all about what your policy does not cover. For example, life insurance policies generally have a clause regarding committing crimes, wartime activities, and the like. This is where you would find those types of exceptions to coverage. Exclusions not listed here may appear in other sections that make sense for them to do so (like an exclusion specific to a rider may be listed in the riders section).

Limits of liability

In this section, the insurance carrier goes over the dollar value of exactly how much they will cover based on the losses you experience. If it’s life insurance and someone dies then it will list the initial face amount, followed by any riders that alter it like an accidental death rider.

Conditions

This part gets down to the insurance carriers’ promise to pay and the conditions that must be met in order for that to occur. If somehow you don’t meet these conditions then the carrier may delay, or deny your claim. Common things in the part vary based on the insurance type you have but reasonable things like protecting your property after damage or theft, or having an inspection are common types of conditions to have.

The exact language is important

When reading any insurance contract some language is much more absolute than others. Statements that include words like “must, or, never, and, always” are strict statements that must be followed. For instance, when filing a claim you may have to report your loss to the authorities “within” 24 hours, or submit a death certificate within 30 days, etc are many different statements than just “tell the authorities”, or send us a death certificate.

The above explanation describes the sections that are legally required to be within all insurance contracts. A life insurance policy also contains these sections as well. If you look through your car insurance, home insurance, and others, you’ll find they all follow this same pattern.

If your policy is confusing you or you want to see if another option exists that offers more coverage contact us today.