What are some important provisions which a life insurance policyholder should be aware of?
Suicide clause This states the death from suicide, within one year from the Issue Date of the policy or date of last reinstatement, whichever is later and whether the policyholder is sane or insane, is not payable. In such a case, the insurance company only has to return the premiums without interest.
Non-forfeiture provisions Most policies provide non-forfeiture provisions in the event that the insured cannot afford the premium payment. These include cash, reduced paid-up insurance and extended term insurance.
Loan provisions If an insured needs cash urgently, he/she does not have to give up his policy for its cash value. He/she can apply for a loan against the cash value if the policy has a loan provision attached.
Free look period This provision allows an insured to cancel his/her policy by writing to the insurance company within 14 days after receiving the contract. All premiums paid will be refunded, less any medical fee incurred in assessing his/her application.
Premium provision This provision includes details of the grace period and the requirements for reviving or reinstating a lapsed policy.
