15 LEGAL ISSUES TO BE ADDRESSED BY LIFE INSURANCE POLICIES

ABSTRACT

Legally, life insurance is a contract, governed principally by state law. A life insurance contract promises to pay a specified amount of money to a designated beneficiary when the insured person dies. The contract is between the insurance company and the policyowner, who pays premiums in exchange for the promised death (and other) benefits. Frequently the policyowner is the person insured, but someone other than the insured may own the policy. In return for its promise to pay death and other benefits under the contract, the insurance company charges a premium to provide adequate funds to pay death benefits when they come due and to cover insurance company expenses and profits. (Ultimately, though, the death benefit paid by the insurer on any given policy may significantly exceed the total of the premium(s) paid by the policyowner.) Although state laws vary, life insurance contracts are issued with a number of standard provisions. This paper provides insights about the 15 legal issues that should be addressed in most life insurance policies. 

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