In 2020, just 54% of Americans were covered by life insurance. This is widely due to the fact that 50% of Americans overestimate the price of term life insurance. Most Millennials overestimate the cost by 213%!

Life insurance is a contract with an insurance company in which you pay premiums to provide financial security for loved ones after your death. But if the policy isn’t read and understood, they may end up receiving less than what would be necessary.

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Breakdown of Your Life Insurance Declaration Page

As a policyholder, you deserve to know what your insurance will cover. 

The Life Insurance Declaration Page section goes by a few different names, most commonly the policy specifications or schedule of benefits. Regardless of what it’s called, its content gives more information on what your specific package includes for protecting those who depend most upon us when we cannot be there ourselves. 

Here’s what’s covered in this section that you need to know:

Policyholder or Policy Owner

This is usually the same person—you—but you could be buying a policy for someone else, in which case you’re the owner, and they are insured. Essentially, the one who pays premiums owns it, while the insured is the one whose death prompts a payout.

Policy Number

With your policy number, you can keep track of what plan is yours so that it can be quickly resolved when the need arises for a claim or an update on the information.

Policy Issue Date

The policy issue date is when you were offered a life insurance policy, not when your coverage begins. 

Effective Policy Date

The effective date of your policy is the day you have coverage. It’sIt’s the most important because your life insurance policy will not be paid out if you die before it. 

Coverage Included 

This will list the type of policy you have purchased, term life insurance, or permanent life insurance, along with its variables. (This should be something you know when purchasing!) 

Policy Endorsements

An endorsement changes your current policy without renewing it. This can cause a change in premiums; however, the changes will remain in force until your policy ends.

Rate Class

Your rate or premium class is based on the health classification you received during the underwriting process, determining how much you pay for your policy premiums. This is done through a comprehensive evaluation of your medical history, family history, lifestyle, and background with one of four possible outcomes:

  • Preferred Plus
  • Preferred
  • Standard Plus
  • Standard

If you have health issues that cause expensive premiums, the insurance company will give you a chance to re-evaluate your classification after one or two years. If any changes happen during this period (such as improvements in your condition), they’ll be reflected in future policies.

Policy Term Length

When you need to buy life insurance, term lengths are a crucial factor. Term length is the duration of your coverage and varies from 10-30 years, with most policies in that range.

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Supplemental Coverage (Riders)

You can add supplemental coverage to your life insurance policy with riders. Most of these optional add-ons come at an additional cost and give you financial protection if something were to happen while you’re still alive. This can include: 

Disability income rider

Disability income riders are a way to provide supplemental coverage for when you can’t work. They’re not enough on their own, though — individual disability insurance policies typically offer more robust protection and should be purchased instead if possible.

Term conversion rider

Term conversion riders allow you to convert a term life insurance policy into permanent coverage by the end of your contract. Term conversions are usually included in policies for no additional cost, and if you want one with your current plan when it expires, make sure to start within six months before then, or else they may not honor it!

Critical illness rider

Some life insurance companies offer a critical illness rider if you develop a severe illness. If you have this rider on your policy, it will pay out a lump sum deducted from your death benefit.

Insurance Coverage Details

The insuring agreement summarizes promises that the insurance company makes to you and what they are willing to offer. You can choose from different death benefits, life expectancy tables, or premiums depending on your needs.

The “insuring agreement” section summarizes all the terms and definitions in previous areas. It is easier for both parties (you/the insurer) to understand how much will be paid if something should happen when one party dies while insured by this particular type of policy.

When it comes to life insurance, some unfortunate loopholes exist. For example, if you commit suicide, your insurer may not offer a payout to your beneficiaries; many insurers will also refuse payment in the event of one’s death due to an unmentioned risky lifestyle behavior.


Your life insurance beneficiaries are an essential part of your policy, and with this section, you can update them or add new people to be in charge. You’ll also see who will get what percentage of your death benefit should something happen to you.

Supplemental Coverage (Life Insurance Riders) 

Life Insurance Riders are a type of supplemental coverage that can be purchased to supplement the life insurance policy. They provide additional benefits, such as reduced rates for accidental death and dismemberment or increased disability income in case you cannot work because of an illness.

Waiver of Premium Rider

A waiver rider takes care of the premium payments if you’re unable to work due to injury or illness and will usually cover up until six months after the onset date. The parameters under which your disability must fall, however, are pretty slim.

Accidental Death Rider

The accidental death benefit is paid in addition to the standard life insurance benefits for insureds who die accidentally. The amount of money typically depends on how much coverage they purchased and can be anywhere from $5,000 to a million dollars.

Some people have an “accidental death” rider on their life insurance policy which pays the beneficiary a lump sum in addition to what they would receive if the person died of natural causes. This generally does not cover those with extreme hobbies such as skydiving.

Guaranteed Insurability Rider

Also known as a guaranteed purchase rider, this insurability rider on your life insurance policy lets you increase coverage without taking another medical exam. This is a wise decision in case of an unforeseeable future event that might make it harder to get insured if you develop illnesses such as high blood pressure or diabetes.

Family Income Benefit Rider

Look into a guaranteed insurability rider if you want to increase your life insurance policy coverage without having to take another medical exam. Instead of getting paid out in one lump sum, beneficiaries receive installments and get an end-of-term death benefit after the term is up.

Child Term Rider

Americans disagree on the question of life insurance for children. While just 33% feel they have a solid understanding, 47% agree that there is a need to insure minors with permanent policy when explained to them. A child rider is also known as a term life policy’s “child insurance.” One of these covers all your children and future ones in the case that one would die. The cost for this type of coverage is less than purchasing individual policies, so you will save some money by choosing this option over buying separate policies for each child. 

Long-Term Care Rider

A long-term care rider is a benefit policy that helps cover the costs of assisted medical services for seniors. The payments taken out of your death benefit are designed to offset healthcare expenses associated with aging or critical illness, including nursing home stays, private nurses, hospice care, etc.

Accelerated Death Benefit Rider

When you’re diagnosed with a terminal illness, an accelerated death benefit rider pays out to cover associated medical expenses or the cost of care. This way, your family won’t have anything on their plate once you’ve passed away from this final stage in life. To qualify, you will need a doctor’s note stating your life expectancy (on average 12-24 months), but some insurance companies will allow you to use this rider if your life expectancy is less. 

Return of Premium Rider

A return of premium rider is an optional addition to a term life insurance policy which provides for a refund or partial refund if the insured doesn’t die within the designated period. This guarantees that you’ll have all your money back even though you didn’t use it and can lead to lower premiums overall because there’s less risk on behalf of the insurer.

Life Insurance Policy Glossary

The policy terms and definitions section of your life insurance contract is where you can decode some tricky language. Here is a list of standard terms that you will likely encounter: 

Term Life Insurance: Term life insurance is typically the cheapest as it lasts a set amount of years with no cash value other than the death benefit. The policy has an expiration date, at which point you would have to buy another one or find some way to continue coverage if desired.

Permanent Life Insurance: Permanent life insurance policies lasts a lifetime and includes an investment portion. The cost for this type of life insurance is substantially more because it’s designed to be permanent, not temporary, like term coverage.

Death Benefit: The life insurance death benefit is the amount of money paid out to your beneficiary or beneficiaries if you die. However, many different coverage amounts can vary as needed, and with additional underwriting, it’s excellent for people who want peace of mind if anything should happen.

Beneficiary: The recipient of your policy’s death benefit (your life insurance policy’s beneficiary) can be your spouse, multiple people, or even an organization. You choose who the benefits go to and what percentage each beneficiary receives for their share.

Insurance Age: The age you are categorized as by the life insurance company. It will be your actual age or near to it.

Life Insurance Premium: Your premiums are the amount you pay for your policy on a monthly or annual basis.

Not Participating: A non-participating denotation on a life insurance policy means that the insurer does not issue dividends. Term policies do not usually have any cash value, so they will always be without this type of designation because it is irrelevant to them. Whole life insurance policies typically include an investment component and may or may not designate these types as either participating or non-participating. Those looking for maximum returns should opt-out if possible to avoid paying taxes when withdrawing funds from your account during retirement age.

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