Life Insurance Policy Provisions for Dow Incorporated Employees and Retirees

What Are Life Insurance Policy Provisions?

As Dow Incorporated employees, we understand that you have likely not spent countless hours researching life insurance policies. The provisions of your life insurance policy describe or explain the policy's various characteristics, benefits, and terms. The terms of your life insurance policy define both the insurer's (the insurance company) and your rights and responsibilities. Dow Incorporated employees and retirees must be aware of the numerous clauses contained in each life insurance policy.

The majority of state statutes require certain provisions to be included in life insurance policies and prohibit others. The free look, the grace period, the incontestability clause, and the reinstatement clause are frequently mandated provisions. Certain provisions (such as beneficiary designation and entire contract clause) are present in all life insurance policies, regardless of policy type or state of issuance. Typically, life insurance policies include a number of clauses that either you or the insurance company may choose to include.

A recent study conducted by LIMRA, a research and consulting firm for the insurance and financial services industry, found that an increasing number of life insurance policies now offer accelerated benefit provisions. These provisions allow policyholders to receive a portion of their death benefit while they are still alive if they are diagnosed with a terminal illness, critical illness, or long-term care needs. This can provide valuable financial support for medical expenses or long-term care services, offering a sense of security and peace of mind for Dow Incorporated employees and retirees. It's important for individuals in this target audience to explore life insurance policies that include such provisions to ensure comprehensive coverage for their changing needs. We recommend that Dow Incorporated employees and retirees consult additional resources to determine the optimal policy provisions, alternatives, and clauses for their unique circumstances.

Common Policy Clauses

Rescue Provision

Certain life insurance policies impose renunciation fees in order to recoup expenses incurred during the issuance of the policy. Frequently, a bailout clause eliminates these surrender costs. This provision permits you to withdraw your funds or cancel your policy at no cost. Typically, you can only invoke the rescue clause if the insurance company fails to meet a certain standard, such as if its interest rate falls below market standards.

Beneficiary Assignment

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Incontestable Clause

With the exception of nonpayment of premiums, the insurance company is prohibited from contesting or terminating your life insurance policy after a specified period of time (typically two years). The insurance company must act prior to the expiration of the contestable period if it discovers grounds to contest or void the policy. Typically, a policy cannot be terminated after the specified period expires.

Falsification of Age/Sex Clause

We would like to remind all Dow Incorporated employees and retirees of the significance of providing accurate age and gender information on their life insurance policies. In determining the cost of a life insurance policy, both age and gender are taken into account. If you lied about your age or gender in order to receive a lower premium, the insurance company has certain rights upon discovery. If you are still alive when the error is discovered, the insurance company may alter your future premiums and require you to pay the additional premiums you should have paid prior to the error. If the misrepresentation is not discovered until after your death, the insurance company must calculate the amount of coverage your premiums would have purchased for a person of your actual age or sex and pay that amount to your beneficiary.

Possession Provision

A life insurance policy's proprietorship clause identifies the policyholder by name. This is particularly important when the policyholder is not the insured (e.g., when the insured's wife possesses a policy on her husband's life).

Premium Payment Provision

This provision stipulates that timely premium payment is required to maintain coverage. If you neglect to pay your life insurance premiums, your coverage could lapse. You may be able to reinstate a lapsed policy by paying back premiums plus interest.

Policy Provision for Loans

A number of our Dow Incorporated customers have found policy loans to be an effective financial tool. The loan provision of the insurance policy specifies the utmost amount you can borrow against your cash value, the interest rate, and other loan terms. If you have outstanding policy loans at the time of your demise, the unpaid balance plus any accrued interest will be deducted from your death benefit. Loan provisions are present in the preponderance of cash-value policies. A term life insurance policy's cash value cannot be borrowed. The policy loan provision is therefore inapplicable.

Reinstatement Provision

A reinstatement clause stipulates that an insurer must reinstate a lapsed policy if you request it within a given time frame. The reinstatement period is typically three years from the date of your last premium payment. Prior to reinstating your policy, the insurance company may require you to pay all delinquent premiums plus interest and provide proof of insurability. This indicates that you may be required to undergo a medical examination to prove your good health. This may be a desirable option if, due to your age, you would be required to pay significantly higher premiums for a new policy.

Provisions for Renewal

This provision in a term life insurance policy allows you to renew the policy regardless of your current physical condition and without a medical exam or proof of insurability. At renewal, however, your premiums will increase to reflect your present life expectancy.

Spendthrift Provision

The purpose of a spendthrift clause is to protect the proceeds of the policy from the actions of a careless beneficiary. The spendthrift provision stipulates that proceeds will not be paid in a single sum and that any money not paid to the beneficiary promptly will be protected from the beneficiary's creditors by the insurance company. In addition, the spendthrift clause prohibits the recipient from designating payments to creditors or borrowing against the proceeds.

This clause specifies that no mortality benefits will be paid if the insured commits suicide within a certain time frame after purchasing the policy. The duration is typically two years from the date of purchase. During this period, if you were to commit suicide, you would not receive any death benefits, but your premiums would typically be refunded.

Conflict or Military Service Exemption

Typically, this clause states that your insurance policy will not pay out if you die as a result of a declared conflict. The exclusion may also restrict the payment of proceeds for any death that occurs during the insured's military service.

  Conclusion

Life insurance policy provisions are like a well-crafted safety net for Dow Incorporated employees and retirees, providing the necessary support and protection during uncertain times. Just as a seasoned mountaineer prepares for a challenging climb with a sturdy rope and reliable gear, life insurance policy provisions offer various safeguards and benefits. Each provision is like a different piece of climbing equipment: the assignment clause acts as a secure harness, allowing for easy transfers; the reinstatement provision is akin to a safety line, giving a chance to start anew if the policy lapses. By understanding and utilizing these provisions, Dow Incorporated employees and retirees can navigate the cliffs of life with confidence, knowing they are protected along the journey to financial security and peace of mind.