Life Insurance Policies: Information and Updates

Author: Disabled World
Updated/Revised Date: 2022/04/06
Contents: Main - Subtopics - Publications

Synopsis: Information news and updates on life insurance products including policy types accidental death and critical illness policies. Life insurance (or commonly life assurance, especially in the Commonwealth) is a contract between an insured (insurance policyholder) and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money (the "benefits") in exchange for a premium, upon the death of the insured person. Most U.S. states specify that the contestable period cannot be longer than two years; only if the insured dies within this period will the insurer have a legal right to contest the claim because of misrepresentation and request additional information before deciding to pay or deny the claim.

Main Document

What is a Life Insurance Policy?

Life insurance (or commonly life assurance, especially in the Commonwealth) is a contract between an insured (insurance policyholder) and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money (the "benefits") in exchange for a premium, upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness can also trigger payment. The named beneficiary receives the proceeds and is thereby safeguarded against the financial impact of the death of the insured.

The face amount of the policy is the initial amount that the policy will pay at the death of the insured or when the policy matures, although the actual death benefit can provide for greater or lesser than the face amount. The policy matures when the insured dies or reaches a specified age (e.g., 90 years old).

Upon the insured's death, the insurer requires acceptable proof of death before it pays the claim. The normal minimum proof required is a death certificate and the insurer's claim form completed, signed (and typically notarized). If the insured's death is suspicious and the policy amount is large, the insurer may investigate the circumstances of the death before deciding whether it has an obligation to pay the claim.

Continued below image.

Photo shows a person filling out a life insurance form.
Photo shows a person filling out a life insurance form.
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Purpose of Life Insurance

Life-based Insurance Policies

Insurance Policy Nullification

Special provisions may apply, such as suicide clauses, wherein the policy becomes null if the insured commits suicide within a specified time (usually two years after the purchase date; some states provide a statutory one-year suicide clause).

Any misrepresentations by the insured on the application is also grounds for nullification.

Most US states specify that the contestable period cannot be longer than two years; only if the insured dies within this period will the insurer have a legal right to contest the claim because of misrepresentation and request additional information before deciding to pay or deny the claim.

Subtopics


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Cite This Page (APA): Disabled World. (2022, April 6). Life Insurance Policies: Information and Updates. Disabled World. Retrieved April 16, 2024 from www.disabled-world.com/disability/insurance/life/

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