How to read your life insurance policy
What the parts of a life insurance policy mean, so you know what your own document says before you talk to your insurer, agent, or attorney.
A life policy pays a death benefit to the beneficiaries you name when the insured person dies, as long as the policy is in force. Term life keeps a level premium and death benefit for a set period, after which premiums often rise sharply.
Permanent policies add a cash value that grows over time and can be borrowed against; term policies have none. An early contestability period, often two years, lets the insurer investigate and deny a claim for misstatements made on the application.
The parts to find on a life insurance policy
- Beneficiary
- The person or entity you name to receive the death benefit.
- Cash value
- A savings component in some permanent policies that grows over time and can be borrowed against. Term policies have none.
- Contestability period
- An early window, often two years, during which the insurer can investigate and deny a claim for misstatements on the application.
- Death benefit
- The amount paid to your beneficiaries when the insured person dies, as long as the policy is in force.
- Level term
- A period during which your premium and death benefit stay the same. Premiums often rise sharply after it ends.
- Rider
- An optional add-on that changes or extends coverage, such as a waiver of premium or an accelerated death benefit.
What UnderstandMyPolicy shows you
Upload your own life insurance policy and it reads the document and explains what it says, with every answer cited to the page and clause. It reports what your policy states, not whether your coverage is enough — that is a conversation for you and a licensed agent or attorney.