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Insurance Education

We read the fine print – so you don’t have to. Here’s what’s in your life insurance policy.

April 4, 2019

It seems like everywhere you turn, there’s another waiver to sign, box to check, or list of terms and conditions that may apply. Legal documents aren’t just for major life events anymore…you can’t even download an app or order a pizza (or download an app to order a pizza) without signing some sort of contract. So do you read all that fine print? Like, REALLY read it? Or do your eyes head straight for the X you’re supposed to sign by or the checkbox you’re supposed to click?

If you’re the “scroll right to the bottom” type, you’re not alone. In a recent Deloitte study, 91% of participants admitted to accepting legal terms and conditions without reading them. Among 18-34 year olds, the number was even higher…a whopping 97% of consumers in that age group breeze right through the provisions and particulars in exchange for faster access to whatever’s on the other side.

Life insurance, as you might guess, comes with its own fair share of fine print. To be honest, those statistics above don’t give us a lot of confidence that you’re going to read it, but we have to tell you…it’s really important that you do.

If you’re among the diligent 3% of Millennials reading every tiny word of every lengthy agreement, feel free to stop here. The rest of you…let’s talk. These are a few of the things you may be missing if you skip right to the signature line of your life insurance policy.


Exclusions Explained

Since the purpose of life insurance is to provide better financial protection for the people you love, it’s super important to know about any situations that could prevent your beneficiaries from receiving payment. Some common exclusions include:

Suicide - If the insured person dies by suicide within a certain amount of time after the purchase of the policy (two years in most cases), a death benefit typically is not paid.

Dangerous and/or illegal activities - Some policies may exclude certain hazardous activities (e.g., scuba diving, rock climbing, etc.) and illegal activities (e.g., use of illegal substances, noncompliance with seatbelt laws, etc.). This means that if the policy holder were to die while engaging in these activities, a benefit may not be paid out.

Death by natural causes (for accidental death policies) - If you purchase an accidental death life insurance policy, benefits will ONLY be paid out if the death of the policy holder is the result of an accident rather than illness, disease, or other natural causes.


Bonus Benefits

You may be missing out on extra perks if you don’t read your contract thoroughly. For example, some policies have an accidental death rider that may not cost extra, but could increase the death benefit.

Many policies also contain an accelerated death benefit rider that may enable the policyholder to receive part of the benefit in advance in the event of a terminal diagnosis.

Talking about fatal accidents and terminal illnesses might make you squirm, especially in the context of your own possible future, but the truth is, those things happen sometimes. Being better prepared for the things you fear the most is empowering…and in this case, a pretty amazing gift to give the people you love.

Financial Flexibility

Concerned about keeping up with your life insurance premiums? Check your contract. You may be able to reduce the face amount of your policy (thereby reducing your monthly premiums accordingly) without going through the application process again.

If you’re considering letting your coverage lapse because money is tight, this could be an alternative that would allow you to keep at least some protection for your family in place while adjusting for your current budget.

Keep in mind that if you’re experiencing financial struggles now, things could get much worse for the people who depend on you if something tragic were to happen. Some life insurance is better than no life insurance!

Reference Realness

If you own a 20-year term life policy, there’s a good chance that even if you did read the contract before you signed it, you’ll forget some of the details over time. (If not, please tell us your secret.)

So keep that wordy little document handy in case you need a refresher on the expiration date of your policy, your monthly rate (because let’s face it, thanks to the convenience of auto-billing, some of us have no idea what we’re actually paying for each month), or any other important tidbits of information you might want to revisit!


OLC Overview

So what’s in OUR contract? You’ll have to read it for the whole story, but here’s some of what you can expect to see!

Privacy Policy - details about how your personal data is used (don’t worry, OLC won’t share it)

Policy Specifications - start date, face amount, minimum face amount (the lowest amount of coverage you can have to keep your policy active…of “in force,” as we say in the biz)

Schedule of Benefits & Premiums - annual totals and a breakdown of payments if made semi-annually, quarterly, or monthly (so you have to do less math)

Accelerated Death Benefit Rider - detailed explanation including qualifications (life expectancy of 12 months or less) and maximum amount of accelerated benefit (50% of total death benefit or $250,000, whichever is less); rider may be included in the policy at no extra charge…woo-hoo!

Face Amount Reduction - explanation of how you may be able to reduce the amount of coverage you carry (see the policy specs for the minimum requirement); this is something we hope you’ll only consider if you’re having difficulty keeping up with payments

Suicide Exclusion - we wish we didn’t have to talk about this one, but it’s important…if the insured dies as a result of suicide within two years of purchasing the policy, no death benefit will be paid out; however, the total amount of premiums paid on the policy will be returned

Misstatement of Age or Sex - if the insured person failed to accurately disclose their age or sex, rates will be adjusted to reflect their correct age/sex—so just be honest…we think you’re awesome just the way you are

Payment Details - options for payment methods and schedule…so you can choose what works best for you!

Renewal & Reinstatement - renewal rates can be found in the schedule of benefits and premiums, and reinstatement of a lapsed policy is typically an option within a 60-day grace period…because sometimes you might need a little wiggle room

Conversion - if at any point you’re interested in converting your term life policy to a permanent life insurance policy, this section helps to explain the process


You’ll also find a glossary to help you navigate life insurance lingo, information about how life insurance works, contact information for the agent you worked with, and all kinds of other helpful stuff!


Just Read It

The trend of skipping the small print (even on big decisions) has inspired a number of studies.

In one such experiment (thankfully conducted solely for academic research), 98% of participants missed a clause requiring that they surrender their firstborn child in exchange for access to a fictitious social media platform.

In a real life example on the other side of the spectrum, a Georgia teacher recently won $10,000 as a result of reading the fine print on her travel insurance policy.

When you purchase life insurance from Our Life Covered℠, you probably won’t find any $10,000 prizes hidden in the contract. On the bright side, we also don’t want any of your children. But we DO want to help you find life insurance to help better protect the financial future of those children, and we want to help you understand exactly what you’re getting when you purchase a policy from us.


Ready to get started? Connect with our agents via phone (888-828-9760), text (636-590-7416), email, or live chat!


The fine print: Want to learn more about life insurance and talk more about how to work toward a longer, healthier, more financially secure life? Follow us on Facebook, Twitter, Instagram, and Pinterest, or send us a message directly to join the conversation.


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