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How to read and understand your life insurance policy

Most people hate the thought of reading a life insurance policy (or any insurance policy, for that matter). However, if you can find the time and the patience, it's a good idea to read through your whole policy. If you do, you'll understand your policy better.
Apr 30th 2019
1 min read
How to read and understand your life insurance policy.

The parts of a life insurance policy

A life insurance policy contains the following parts:

The cover page: This is who the insurance company is and the type of plan you've purchased, and it's signed by an insurance company officer.

The schedule of benefits and specifications page: On this page, you'll find descriptions of the benefits and details of your policy. These include things like:

  • How much and how often you’ll pay.
  • Who the insured person(s) are.
  • The date the policy was issued.
  • The policy number (this is especially important for filing a claim later).
  • Other details about the policy.

Terminology: This section defines some of the jargon in the policy to help you better understand it. Make this section your friend.

Your rights: As the owner, there are certain rights you have with your policy, including:

  • The right to transfer or assign the policy.
  • The right to change or update beneficiaries.
  • The right to receive the cash value and dividends (if applicable).
  • The right to take out a loan against the cash value (again, if applicable).

Claims and settlements: This includes instructions on how to make a claim and information about the choices your beneficiary has regarding the death benefit.

Riders and endorsements: If you have a rider (extra benefits you’ve added to the base policy) or endorsements (adjustments or changes to the base policy), they’ll be attached to the policy along with a copy of your application.

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