Life Insurance Policy Provisions, Options, and Riders
Mandatory and optional provisions
Entire contract (policy plus attached application), grace period (premium still payable; coverage continues), reinstatement (usually within 3–5 years with evidence of insurability and back premiums with interest), incontestability (generally two years from issue, except nonpayment of premium and certain fraud), misstatement of age or sex (benefit adjusted, contract not voided), suicide clause (typically two years, refund of premium), free look (unconditional return), and assignment (absolute vs collateral).
Beneficiaries
Primary vs contingent, revocable vs irrevocable (irrevocable requires written consent to change), per stirpes (down the bloodline) vs per capita (equally among survivors), and the common disaster/Uniform Simultaneous Death Act assumption that the insured survived the beneficiary so proceeds pass to the contingent. Minor beneficiaries require a guardian or trust.
Nonforfeiture and dividend options
Surrender for cash value, reduced paid-up (smaller face, no more premiums), or extended term (same face for a limited period). Settlement options: lump sum, interest only, fixed period, fixed amount, and life income (with period certain or joint and survivor).
Riders
Waiver of premium, disability income, accidental death and dismemberment, guaranteed insurability, return of premium, accelerated death benefit, long-term care, child term, and spousal riders. Riders generally add cost and often require a rider on the base policy plus proof of disability.
Rule of thumb
If the insurer would have charged more had it known the truth, the remedy is usually an adjustment of benefits, not rescission - unless the contestable period is open or the misstatement was material fraud.