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

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