Understanding Your Life Insurance Policy

Life insurance policies, like other insurance policies, are legal contracts. Lawyers - not your lawyers but the lawyers of the insurance company, draw up these contracts. Some contracts are easier to read than others but all require proper and good understanding. The following is a short-list of some of the items that must be clear.

For All Policies:

• Are the premiums guaranteed?
   
• Is the coverage amount guaranteed?
   
• Is the policy "subject to" the clauses of another legal document such as a "master group policy" (If that's the case, have you read and understood the "master policy"?)
   
• Is the policy cancelable by the insurance company?
   
• Have you been supplied with a copy of the application upon which the policy is issued and is all the information in the application true and complete?
   
• Is all the personal information in the policy, including spelling, age, etc. correct?
   
• Is the beneficiary correctly noted and as per your instructions?

For Term Life Insurance Policies

• Is the coverage renewable? If yes, what is the maximum guaranteed renewability period?
   
• What are the renewal rates, how soon will the policy premiums increase and how much will the increase be?
   
• After the initial premium period is over, how often will renewal premiums increase?
   
• If the policy is "convertible":
  • What named policy is it convertible to
  • Does the company currently offer a conversion policy?
  • Can you convert immediately if you needed to?
  • When will the policy no longer be convertible?
  • Does the company publish the premiums for its conversion policy?
  • Does the company offer a range of choice for conversion?