1. Jerry Vanderzanden, CLU, ChFCPRO
    Co-Founder, Coastal Financial Partners Group, California
    There are a dozen or so statutory provisions (the number varies a little by state) that set the minimum legal standards for life insurance contracts - insurers can and usually do make their provisions better for the consumer. For example, most states require a 10 day "free look" period during which a policy owner can back out of the purchase but many insurers in recent years have been offering as much as 20 days.

    Some of the key provisions, after basics like parties to the contract, insurable interest, etc., from a consumer's perspective are:

    1. Grace period for premiums of one month
    2. Incontestable and Suicide clauses - insurer cannot in most cases contest a claim after 2 years
    3. Nonforfeiture provisions (cash surrender, extended term and reduced paid up insurance) and the unofficial nonforfeiture provision, automatic premium loan
    4. Reinstatement clause - provision to reinstate lapsed coverage after the grace period
    5. Rights to naming and change beneficiary
    6. Settlement provisions - alternatives to taking proceeds as lump sum
    7. Policy loans
    8. Assignment rights
    Answered on May 18, 2013
  2. Steve KobrinPRO
    President, The Firm of Steven H. Kobrin, LUTCF, 6-05 Saddle River Rd #103, Fair Lawn, NJ 07410
    Jerry has provided you with a good summary of the provisions in your standard life insurance contract.

    I will share with you some additional info about one clause in particular: the suicide provision.

    I have actually handled claims due to suicide. You can imagine how extraordinary an experience that can be. Being there for people in their time of deep grief is hard enough. Getting involved with finances at the time requires great delicacy.

    And to do so when the cause of claim is suicide gives things an almost unreal quality.

    Most people have a really tough time dealing with death. When people take their own life, it makes things almost too hard to handle.

    Against this crazy backdrop, you have the added question as to whether or not the insurance company will pay the benefit. I am pleased to report that in the few cases I have had, the answer has been an unequivocal yes.

    One claim was actually pretty close to the two-year limit. As such, there was concern as to how tough a line the insurance company would draw. They are, after all, worried about insurance fraud and people trying to collect benefits illicitly.

    But this case was indeed tragic. It involved an elder gentleman who just was really sick and had had enough of life.

    So he settled things in his own way.

    The claim was paid without delay.
    Answered on July 12, 2015
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