Life Policies: introduction to life policies: what is a life policy?
A life policy is a contract between an insurance company and the policyholder. The policy provides for benefits to be paid if or when certain events happen, in the life of one or more individuals. A lump sum being paid on death is the most obvious example of this.
The form of the policy or contract varies from one insurance company to another. Usually it consists of one or more of the following:
- The policy schedule - which gives basic information such as the date of the policy, the name(s) of the assured and life assured and so on.
- General provisions - which are standard (often pre-printed) clauses applying to all policies of the type in question and setting out the rights and obligations of the assured and the insurance company. For example, when the policy can be surrendered.
- Special provisions - which are additional clauses applying only to the particular policy.
- Endorsements - which contain further provisions applying only to the particular policy and which often record amendments which were made to the policy after it was issued.