Principles of Risk Management and Insurance, 13th Edition

Life Insurance Contractual Provisions

Life insurance policies contain numerous contractual provisions. This section discusses the major contractual provisions that life insurance consumers should understand.

Ownership Clause

The owner of a life insurance policy can be the insured, the beneficiary, a trust, or another party. In most cases, the applicant, insured, and owner are the same person. Under the ownership clause, the policyholder possesses all contractual rights in the policy while the insured is living. These rights include naming and changing the beneficiary, surrendering the policy for its cash value, borrowing the cash value, receiving dividends, and electing settlement options. These rights generally can be exercised without the beneficiary’s ...