What Disclosures Are Required in a Life Insurance Policy?
For many families, a life insurance policy is necessary for financial continuity in the event of an unexpected death. The policyholder is usually required to disclose any and all information about family history and medical issues (even status as a smoker must be included), or else his family may not receive the full amount of the policy. However, the insurer is also required to make disclosures about the policy.
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Purpose Disclosure
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Among the most important disclosures an insurer must make on an policy is purpose, which protects the buyer from purchasing a policy with ambiguous terms. Misleading methods of sales, misrepresentation of the policy and unfair comparisons can prevent a policyholder from fully understanding the insurance plan he has purchased. In most states, a purpose disclosure must clearly state what the policy is intended to do and what the policyholder is responsible for.
Disclosure Statement
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Most states require a disclosure statement on an insurance policy, which is required to outline, for the protection of the insured, the cost and coverage provided by the plan. A statement is usually required, stating that the disclosure portion does not alter or modify the policy that has been issued. The source of insurance, and personal information about the insured, including name, age and sex, as far as what can be confirmed by the insurance company, are included in the disclosure statement to prevent against misinterpretation of the policy.
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Certification and Maintenance
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The disclosure policy for life insurance companies must also disclose all information about the certification and maintenance of the policy. A disclosure statement must be given no later than the time it was signed by the insurance applicant. Moreover, the certification of a disclosure statement's delivery is usually required to be kept on file for a certain amount of time. Most states mandate the disclosure be kept on file for at least three years, or until the next regular examination by an insurance department. Such a disclosure verifies that the agreement is legitimate and that all parties have signed off on the agreement with full understanding of the requirements.
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