When your insurer gives you the policy document, it’s important to read through it carefully to make sure you understand it. Your insurance advisor is always there for you to help you with the tricky terms in the insurance forms, but you should also know for yourself what your contract says. In this article, we’ll make reading your insurance contract easy, so you understand their basic principles and how they are put to use in daily life.
Key Takeaways
- Life insurance contracts spell out the terms of your policy, including what’s covered and what’s not as well as what you’ll pay.
- A life insurance contract can contain terminology and jargon that you may not be immediately familiar with.
- It’s important to read through an insurance contract carefully before signing so you understand what you’re agreeing to.
- You should also review the contract to check for any errors that may affect your coverage or costs.
Insurance Contract Essentials
When reviewing an insurance contract, there are certain things included that are typically universal.
Offer and Acceptance. When applying for insurance, the first thing you do is get the proposal form of a particular insurance company. After filling in the requested details, you send the form to the company.
Consideration. This is the premium or the future premiums that you have to pay to your insurance company. For insurers, consideration also refers to the money paid out to you should you file an insurance claim. This means that each party to the contract must provide some value to the relationship.
Legal Capacity. You need to be legally competent to enter into an agreement with your insurer. If you are a minor or are mentally ill, for example, then you may not be qualified to make contracts. Similarly, insurers are considered to be competent if they are licensed under the prevailing regulations that govern them.
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When applying for insurance, you will find a huge range of insurance products available in the market. If you have an insurance advisor or broker, they can shop around and make sure that you are getting adequate insurance coverage for your money. Even so, a little understanding of insurance contracts can go a long way in making sure that your advisor’s recommendations are on track.
