Affordable Life Insurance Protection for Your Family

What Does a Life Insurance Policy Cover?

There are two basic types of life insurance plans: Term and Permanent.

All life insurance policies including term life and permanent life plans contain four basic policy features:

Free Look – You can cancel your life insurance policy within 10 days of purchasing your coverage and any paid premium will be refunded to you.
Grace Period – After the premium payment due date there is usually a 30 day grace period. The life insurance policy stays in effect and will pay out a death benefit (deducting any owed premiums) during this grace period.
Incontestable Period – The life insurance company can take up to two years to contest your life insurance policy. This period of time is usually used to check on the information you provided on your application for coverage. After the first 2 years you are insured, your life insurance coverage is incontestable.
Suicide Clause – If the insured person commits suicide within two years of becoming insured, the life insurance policy is declared null and void. This exclusion is only one year in some states.

You may choose to limit or expand your life insurance coverage for term insurance or permanent insurance policies through the use of policy riders, which are optional provisions that can be added to your original life insurance policy for an additional premium.

Usually, policy riders are purchased to add additional benefits that are not included in a standard life insurance policy.

Examples of life insurance riders may include:

Accidental Death Benefit – An additional death benefit would be paid out on the life insurance policy if the insured dies from a defined accident covered by the policy.
Disability Income Rider – If the insured becomes disabled, the insurance company will pay a monthly income to the insured person.
Long Term Care Rider – If the insured meets certain criteria defined in the life insurance policy, such as, confinement to a long term care facility the life insurance company pays benefits to the insured.
Guaranteed Insurability – Additional life insurance can be purchased in the future without the insured having to show proof of insurability.
Waiver of Premium – Under certain circumstances (usually disability after age 65) a policy owner will not have to pay premiums for the life insurance coverage. However, if the insured were subsequently released from disability, the life insurance premiums would have to be paid to the insurance company.
Double Indemnity – If the insured dies from an accident, double the amount of the death benefit is paid out to the beneficiary of the life insurance policy.
Return of Premium – When the insured dies, in addition to the death benefit, an amount equal to the premiums paid in for the life insurance policy will also be paid out to the beneficiary.
Cost of Living Adjustment – Life insurance coverage is increased in relation to increases in the Consumer Price Index (CPI) without having to provide evidence of insurability.
Other Insured’s Rider – Other family members can be insured on the same life insurance policy (as opposed to issuing separate policies for each family member). Examples of other insured’s riders include spouse riders and child riders.

If you are thinking about purchasing a term life insurance policy, you have two additional features to consider adding to your insurance policy.

These term life policy features include either a:

Conversion Privilege – Permits you to convert your policy from term life insurance to permanent life insurance during a specified period of time without having to prove insurability, for example, good health; or
Guaranteed Renewal Privilege – Permits renewal of the life insurance policy for another term without having to prove insurability.