Policy clauses are one of the many types of fine print contained in your policy document.
Once you have your potential life insurance policy's terms and conditions in hand, read over it carefully. Use the term definitions listed below to guide you through any confusing terminology.
Lists clauses protecting your insurance company.
Gives insurance terminology definitions for these clauses
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Your insurance company writes these clauses themselves, so make sure you really do understand the wording for each of them. Sometimes they define words in the policy differently than the commonly accepted meaning. If there is a glossary in your policy, make certain you read these definitions as well.
Be wary of policies that try to limit your rights or impose rules and regulations beyond these listed below.
Entire Contract clause
This statement establishes the life insurance policy and your application as the entire contract. Therefore, the statements you have made on your application are part of the contract and, if these statements are false, can be used as basis to terminate the entire contract.
Misstatement of Age Clause
The insurance company bases decisions about your insurability and the cost of your premiums on your health, habits, and age. Providing false information about any of these statistics is grounds for termination of your policy or decreasing the policy's worth or increasing the policy's premiums.
In the event of your policy's termination because of nonpayment or other noncompliance with the insurance company's rules, you may still be able to reinstate your policy. However, to get it reinstated, you will have to fulfill the stipulations listed in the policy. The reinstatement clause lists the conditions that must be met in order for a delinquent policy holder to reactivate his/her policy. The insurance company is allowed to use their own discretion and, therefore, can deny a request to reactivate a policy canceled because of delinquent payments or noncompliance.
Commonly insurance companies offer coverage for suicide only after you have owned the policy for a certain period of time, which is most often two years. The inclusion of this clause means that if you commit suicide within two years (or less, depending) of purchasing the policy, the insurance company is not required to pay the death benefit, but is obligated to reimburse your family for all the premium payments you previously made.
This clause is more common during times of conflict and instability. The insurance company includes this stipulation to limit their obligations in times of war. If you are a casualty of war, you insurance company is not responsible for paying the death benefit under this clause. Instead, the insurance company is only responsible for reimbursing your family the money you have paid in premiums.
Some policies refuse to pay death benefit proceeds if your death was the result of an airplane accident. These days, a policy with an aviation exclusion is rare, but some do still require you to pay a higher premium to cover the risk, especially in the case of you being employed by an airline.
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