Life Insurance Policy Provisions, Options, and Riders
Standard provisions
The entire contract clause limits the policy to the written contract and attached documents. The incontestability clause generally prevents the insurer from contesting the policy after a stated period, often two years, for misrepresentation; it does not excuse nonpayment of premium. The grace period allows premium payment after the due date before lapse. Reinstatement may require evidence of insurability and payment of overdue premiums; it can restart contestability and suicide periods. The misstatement of age or sex provision adjusts benefits rather than voiding the policy. The suicide clause limits payment if death occurs within a stated initial period. The free-look period allows return for a refund.
Options and riders
Nonforfeiture options include cash surrender, reduced paid-up insurance, and extended term. Dividend options include cash, premium reduction, accumulation, and paid-up additions. Settlement options include lump sum, interest only, fixed period, fixed amount, and life income. Common riders include waiver of premium, disability income, accidental death, guaranteed insurability, child term, and long-term care or chronic illness riders. Assignment may be absolute or collateral.
Traps
Incontestability does not bar a claim for unpaid premium. Reinstatement can restore coverage but restarts contestability. A beneficiary designation is not automatically overridden by a will.
Rule of thumb
Use the free-look period for buyer's remorse, the grace period for late payment, and reinstatement for lapse. Read suicide and incontestability periods separately.
Worked example
A policy lapses for nonpayment. The owner reinstates six months later with evidence of insurability. If the insured dies shortly after reinstatement, the insurer may apply a new contestability or suicide period under the policy terms.