Life insurance Policy Provisions and Limitations

Life insurance Policy Provisions and Limitations

What is a Policy Provision?

A life insurance policy is a legally enforceable contract. It contains promises made by the insurance company about the payment of a death benefit, as well as the contractual obligations between the parties about premium payments, penalties and rights. These promises and contractual obligations are called policy provisions.

The policy provisions will describe among other things:

  • The grace period for unpaid premiums,
  • The policyowner’s right to reinstate a lapsed policy,
  • The policyowner’s 10-day right of recission
  • Death benefit settlement options

 

What is a Policy Limitation?

Policy limitations are contractual limitations on the rights and benefits of the policyowner. They specify when the insurance company can terminate the policy or refuse to pay the death benefit. Some limitations are called exclusions.

Limitations are included in the policy to protect the insurance company, not the policyowner. Limitations generally restrict policy benefits and the insurance company’s exposure to risk, through clauses such as:

  • The suicide exclusion
  • The contestability period
  • The right of the insurance company to void a contract for fraud.

We at YourInsuranceGuy.ca are experts in explaining the the various types of life and health insurance contacts that could protect the entire family. Please feel free to contact us at aman@yourinsuranceguy.ca or at 1 416 509 2540. Please visit us for a no obligation quote or advice.

Buying Life Insurance : this link is an easy access to related articles relating to various aspects to buying life insurance, life insurance contracts, beneficiary nomination etc etc.

 

Prepared by:  Aman Kapur

 

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