Life Insurance Policies

There are four common aspects included in Life insurance Policies that are common to all policies. The four categories are

*the incontestability clause

*the suicide clause

*the lapse clause and allowance for reinstatement

*the clause for explaining simultaneous death of assured and beneficiary

The clause covering incontestability specifies a fixed period of time during which the insurer can investigate and contest the payment of the death benefit. After the period stated in the policy has elapsed, the insurer cannot revoke the policy and must pay the contractual amount specified. A normal period of incontestability is a maximum of two years.

A suicide clause will allow the insurer on confirmation of suicide to invalidate the policy. When a suicide is suspected the insurer has the burden of proving that the death was,in fact, a suicide.

The lapse clause deals with failure by the assured too pay the premiums on the due dates. Most life insurance policies have a 30 day grace period before this clause can take effect.It is mandatory for any policy holder to know the grace period allowance and to maintain payment of policy premiums on time and at least before the expiry of the grace period. The policy stipulates that if an assured dies during the grace period, the policy has to be paid less any outstanding premiums. Reinstatement of a lapsed policy requires at least two things - payment of the premiums owed plus interest at a rate shown in the contract and proof of insurabilty. Reinstatement, normally can only occur within a period described in the policy . The reinstatement provision usually covers between one and five years.

The final clause - simultaneous death governs the requirements should the assured and the beneficiary die as a result of the same accident or circumstance. Usually life insurance contracts specify that it is presumed that the assured died after the beneficiary. Through this legality, the policy may be paid to a second or co-beneficiary and should there be no other beneficiary, then the payment may be made to the estate of the policy holder. In some cases, the order of death may be disputed. This is often the case when other family members or close friends who have not been named in the policy attempt to share in the estate.