How Do You Read A Life Insurance Policy?

Once you’ve made the decision to help protect your family with life insurance, it’s important to understand your coverage. Reading through your life insurance policy can help you understand its benefits and obligations. Life insurance policies typically contain standard sections. Understanding the typical sections of a life insurance policy, and what’s contained in those sections, can help make it easier to review your policy.
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The first few pages of a life insurance policy are typically a high-level summary. You’ll likely find basic information here on the policy benefit amount, what the payments will be, and the insured’s name. Many insurance companies include a cover page with the policy that contains the following:

  • Name of the insuring company
  • Type of plan (for example, term, whole life, or universal)
  • Terms of the policy’s free-look period (during which the owner can cancel a new policy without penalty)
  • Signature of an officer from the insuring company.

The first part of your actual policy is generally the schedule of benefits and specifications or the declaration page. The information contained in this section should be familiar, as you likely discussed it with your agent during the application process. It typically includes the following:

  • Benefit amount (sometimes called the face amount)
  • Amount of your payments (sometimes called the premium)
  • Name of the insured
  • Policy issue date
  • Policy number
  • Payment class (sometimes called the rate class)


The insuring agreement section outlines the major details of the policy. This includes what’s covered by the insuring company and your rights as an owner, such as changing the beneficiary and, when applicable, borrowing against the policy’s cash value. The insuring agreement comprises several smaller sections, which vary based on your specific policy. They may include:

  • Tables or illustrations.
    These are used to show potential future premiums, cash value details, and death benefits. They can also demonstrate how the cost of insurance may fluctuate over time.
  • Definitions.
    Most policies include a section that defines the terms used in the policy. Knowing what the terms mean can help you better understand the policy.
  • Settlements.
    This section provides instruction on how a beneficiary can make a claim and the choices available for receiving the policy’s benefit.
  • Endorsements and riders.
    Additional coverages that make changes to the policy or additional benefits will be listed in this section.

Additional provisions will likely be included in your life insurance policy. State insurance regulations, the insuring company, and the type of policy you purchased determine the provisions included in a policy. Common provisions include:

  • Your application.
    Most states consider the insurance contract to be the application and policy pages together.
  • Incontestability provision.
    This establishes the period of time during which a life insurance policy can be contested for potentially inaccurate information on the application. Assuming premiums have been paid, insurance companies can typically only investigate the application in the first two years the policy is in force.
  • Grace period.
    If you miss a payment, most policies provide a specified amount of time for you to make a payment before the policy lapses.

 Feel free to contact the Pfarr Agency if you have any questions. We have wonderful licensed professionals that would be more than happy to help answer any questions you may have. Our number is (253) 201-1500.

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