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How to Read a Life Insurance Quote

How to Read a Life Insurance Quote

Sure, you’d rather read Finnegan’s Wake than your life insurance quote… because it’s easier to understand. That’s why we’ve compiled these explanations of common clauses found in a life insurance quote or policy. Here’s how to read a life insurance quote.

Definitions of Common Clauses to Help you Read a Life Insurance Quote

The Beneficiary Clause

This is the clause that tells the insurance company who to pay in the event of your wake. These beneficiaries are nominated by you and can be changed ad infinitum. If no beneficiaries are nominated, then the payout will go into the estate and be subject to duties and taxes, which is why it’s important to nominate a primary and contingent beneficiary.

The Survivorship Clause

The survivorship clause in the life insurance quote indicates that if the beneficiary only survives the policyholder by a few days, then the pay-out goes to the contingent beneficiary instead of becoming part of the primary beneficiary’s estate. If a couple, for example, is involved in an accident and the spouse of the policyholder (who is also the primary beneficiary) only survives the insured by a couple of days, then the payout goes to the contingent.

The Incontestability Clause

When comparing life insurance quotes, only opt for ones with this clause. This clause prevents the insurance company from voiding the policy as a result of non-disclosure after a certain amount of time has passed. An insurance company can usually void a contract if the insured was not honest or left out information which affected his or her risk. After a certain amount of premiums paid, this clause prevents the insurance company from not paying out on the grounds of misinformation.

The Spendthrift Clause

The spendthrift clause protects the pay-out from the bad habits of your beneficiaries. If your beneficiary is in deep with the sharks because of his or her ridiculous gambling habit, then your life insurance company can hold back on paying out the money or decide to pay it out in instalments.

The War and Terrorism Clauses

Unfortunately if you’re a terrorist, the life insurance company won’t pay out your claim. Sorry. They also won’t pay out for war-related deaths. This clause stipulates that in the event that the policyholder dies in war, they won’t pay out the full value but may repay premiums.

The Cooling-Off Period Clause

This part of the life insurance quote gives you the opportunity to go through it in detail and decide to opt out if you’re not happy. This is particularly beneficial for online life insurance quotes.

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