Why Buy?      Types      Taxation      Riders      Provisions      FAQs

Standard Provisions of Life Insurance

(Read your policy carefully for the terms of the contract of insurance, they may be different that what is on this page.)

Incontestable Clause: Claims cannot be denied, with few exceptions, after two years from the date of issue.

Grace Period: A stated time period (Usually 30 or 31 days) in which the premium must be paid to prevent the policy from lapsing. The policy will continue in force during the grace period and any death benefits are payable if death occurs during the grace period. The unpaid premium will be deducted from the death benefit. Reminder: An Automatic Premium Loan in a Whole Life policy may pay a late premium.

Misstatement of Age or Sex: lf the age (or sex) of the insured has been misstated in the application, the contract stays in force. The future death benefit will be adjusted to reflect the benefit that the premium would have purchased had the age/sex been stated correctly (or in event of overpayment, a refund is paid).

Suicide: A death benefit will not be paid if suicide occurs during the first two years of the contract.

Entire Contract Clause: The application becomes part of the policy so the insured has a copy. This also is a way that the insurer can deny a claim payment if there is a misstatement of lie in the application that the insurer used when issuing the policy.

Reinstatement: Allows for the reinstatement of a lapsed policy for a limited period of time. It does require the owner repay all back premiums (plus interest), any loans, and prove to be insurable. Our advice is don't risk it!

Free-Look: Allows the applicant a specified number of days following physical receipt of the policy to examine it and, if for any reason is dissatisfied, can return the contract to the company for a full refund of the deposit premium (if any). The "free-look" period can vary by state and is generally no less than 10 days.

Ownership Rights: The named insured does not have to be the owner of their policy. A parent can be the owner of a policy an their child. A spouse can be the owner of a life policy an their spouse. A business can be the owner of life insurance an "key executives". A trust can be the owner of a grantor's policy. The owner has the exclusive right to exercise the following:

Change beneficiary (unless irrevocable)

Receive dividends

Assignment the policy - The policy owner has the right to assign or sell a life policy. There are two types of assignment, Absolute assignment (The owner permanently gives up the policy irrevocably and cannot recover rights) and Collateral assignment. (The owner gives up some policy rights, temporarily, to fulfill the requirements of a loan. Once satisfied, the total ownership reverts back to the owner.) The insurer is not responsible for the validity of the assignment. The insurance company must be notified or is not bound by the assignment.

Borrow - from cash value

Surrender policy - Discontinue the life insurance policy and get the cash value paid to him.

Regarding the Assignment of a life insurance policy by the owner.

Pre-payment: Paying a multiple of annual premiums at one time will result in a discount subject to individual insurance company policy

Policy Fee: An annual fee. This fee does not contribute to the cash values. Beneficiary: The owner may change the beneficiary at any time after issue to whomever e/she wishes. The only exception relates to an irrevocable beneficiary. Types of beneficiary options include hierarchy and percentage. If there is a primary beneficiary the contingent will receive nothing. If the two beneficiaries are both listed as primary the difference may be the amount payable to each one. This can be complicated, is why you need to contact us at 607-843-8860 or insurance@drickardinsurance.com to help you create the policy that will work the way you intend it to.

All prices, programs, features, underwriting, offers, representations and companies shown in this site are subject to change without notice. We may add or discontinue a company or program or an insurer may change underwriting criteria or product line availability without notice to us. With the insurance industry constantly changing we may not be able to keep the site up with the latest information. For the up to date info please contact us. All insurance applications are always subject to current underwriting rules, acceptance of the insurer and adequate premium paid.