What Is A Life Insurance Policy Statement?

Life Insurance can be defined as a contract between an insurance policy holder and an insurance company, where the insurer promises to pay a sum of money in exchange for a premium, upon the death of the insured person or after a set period.

Means a document issued by the insurance company to prove the existence of an insurance Policy. It states the type of cover, the value of cover, the commencement date of the Policy and the Insured Property. Means benefits offered in terms of this Policy to the Policyholder in exchange for a premium. If you have a permanent life insurance policy the life insurance company will generally mail out an annual statement around the month of your policy date. Unfortunately, most life insurance companies are still set up on archaic systems which makes the statements difficult to understand.

Basic Terms of A Life Insurance Policy

Understanding the terminology of your statement is important. Some examples of commonly used words are clarified below:

• Insured– most likely you, but in some situations the policy could be owned by someone else or some type of business

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• Death Benefit– amount the insurance company will pay to the beneficiary if the insured passes away while the policy is in-force.
• Policy Date / Issue Date– the starting point of the policy
• Riders– additional features that can be added onto the policy, usually at an extra expense
• Account Value / Accumulation Value– the amount of money inside the life insurance policy which can be used to pay for the cost of insurance
• Surrender Value or Net Surrender Value– the amount of money the insurance company will give the owner of the policy if the policy were to be cancelled. Also, important to note loans are typically borrowed from the surrender value and not the accumulation value
• Premiums Received Or Premium Payments– money paid into the policy over the past year which goes into the accumulation value.
• Insurance Charges– generally the cost of insurance being charged by the insurance company over the past year
• Fees – additional expense charges deducted from the accumulation value
• Interest Credited– the amount of money credited to the accumulation value because of current interest rates, dividends, or index crediting methods

Conclusion

Policy summaries are commonly provided with every single life insurance transaction. This way, there is never any doubt on the part of the policyholder about the details of their policy. This can save insurance companies a lot of time and money in customer service.

Also Read: Why Are Term Insurance Known As Risk Protection Plans?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.