Importance Of The Fine Print Of A Life Insurance Policy

A life plan is one of the smartest financial decisions you could make.

It provides cover for you and nominees in case of accidents or unfortunate demise.

Life policies are recognized as legally binding contracts which in turn suggest the need to carefully scheme through any tiny detail before signing away.

Strategically placed, and in small fonts challenging to read, lies key information relevant to every buyer.

This is what makes the fine print.

Other than the standard legalese common to financial companies, every insurance provider comes with custom terms and conditions that if not understood accurately could eventually lead to consumer dispute.

In worst cases  some policy holders have gone ahead to apply for covers that extended out of the contract’s scope without even knowing it.

To avoid unnecessary court cases ensure you fully master what your contractor provides and what they do not.

This forms the basis of why fine print is important. We take a look at a number of reasons:

  1. Exposes you to conditions under which the policy could render void

In the case of a life policy, certain circumstances are embedded that could possibly deny payment to a death or accident claim.

These are known as exclusions.

In common cases, this applies if the events leading to the accident are regarded as careless or beyond the policy’s provision.

Usually before any claim is paid the insurance provider carries out an investigation from which the deductions arrived at; determine whether you are legible for reimbursement.

  1. Highlights the benefit amount payable

This refers to the maximum refund a holder will receive in the event of loss.

It varies from one company to the other; however, the two standard options include:

The latter demands higher premium rates in turn.

When applying the fine print should offer maximum details to help you make an informed decision.

  1. Indicates rider provisions

A rider simply refers to additional benefits that come with the package.

Some of the common ones include: double accident benefit, premium waiver, critical illness benefits amongst others.

The fine print section explicitly explains how each benefit applies, and to what extent.

For instance, the double cover allows a beneficiary to receive up to twice of the sum insured however certain restrictions may apply that could inevitably drop that figure to a lesser value.

Under the waiver provision, the insured is allowed to defect on premium payment after they have been disabled but only up to a certain time (usually stated by the organization).

Failure to comprehend such policy clauses could subject you to wrong expectations of much longer periods.

Note:  In other cases, a rider could restrict or limit coverage as opposed to auxiliary benefits.

  1. Highlights add-on exclusions

Rider exemptions work to protect the insurance carrier from too big financial risks that could potentially result in heavy losses.

It basically excludes the company’s liability.

Many insurers do not cover for terminal illnesses such as AIDS or cancer even in the early stages while those that do, come with extreme conditions.

These are regarded as non-acceptable insurance risks.

A thorough consultation could save you ignorant financial mistakes or at the least expose you to better alternatives.

  1. States underwriting requirements

Underwriters professionally assess the degree risks and establish appropriate premium rates depending on the amount of coverage.

Some insurers prefer to have proof of the buyer’s medical history through an attending physician’s statement (APS) while others do not.

The fine details include such necessities.

  1. Fills you in, on legal responsibilities

The key duties revolve around premium payment with firm specification on the dates and deadlines of contract renewal.

This helps to keep your auto insurance up to date. Stated therein are consequences that apply should you falter on payment or delay.

In other cases, it could jeopardize your benefits once you lodge a claim.

Additionally, a fine print cautions against insurance frauds.

This applies to when the buyer withholds or fails to provide truthful important information in the application process.

Usually the company agent will encourage transparency in line with the agreement’s questions but the repercussions come in black and white within the small print, most times a void pact.

In the event the insured would like to extend coverage from a term insurance plan to a permanent one, the procedure to go about it is indicated.

  1. Informs buyer of the claim process

Before reimbursements the company does a research to validate the benefit, which could take longer time frames if special incidents arise; for instance, if the holder died in a foreign country.

The documentation projects a waiting period to when the nominees can expect claim funds with exemptions to unique incidents that require further scrutiny.

Moreover, the policy stipulates deadlines by which a claim form should be submitted after an accident occurs.

Delay consequences are as well included.

  1. Includes a “free- look” period

A fine print spells out the number of days into which one can cancel or return the policy and receive a full refund.

The standard time ranges between 10- 15 days depending on the insurer.

During this period the holder has a right to rescission without major legal implications.  In some instances, tax charges could apply.

Here are a few tips experts advise to avert contract surprises:

  • Request an application form for review in advance. It prepares you for what details to gather prior to the filling process.
  • Consult with your insurance agent and do not shy away from asking questions. Have a pen and paper close to highlight areas you did not understand.
  • Explore various life insurance quotes before settling on a long term one. It exposes you to the best package suitable for your needs.

Final word

A financial print is the detailed section of your policy document that can easily escape your eyes.

Financiers often use this as legal ground to escape refunds especially if the holder was not keen enough to read through and digest.

Although possibly inconveniencing, on the flip side you can make use of the availed details to achieve the most out of your insurer.