Standard Provisions

"Standard Provisions" in the context of insurance policies, including Life Insurance and Living Benefits Insurances (such as Disability Insurance, Critical Illness Insurance, and Long-Term Care Insurance), refer to the set of clauses or conditions that are commonly included in insurance contracts by insurers. These provisions are designed to establish the rights and obligations of both the policyholder and the insurance company, providing a framework for the operation of the policy. Standard provisions are regulated by industry standards and legal requirements to ensure fairness and clarity in the insurance agreement.

Key aspects of standard provisions include:

1. Grace Period: A specified period after a premium due date during which a payment can be made without penalty, and the policy remains in force.
2. Incontestability Clause: After a policy has been in force for a certain period (typically two years in Canada), the insurer cannot contest the policy's validity based on misstatements by the insured, except in cases of fraud.
3. Misstatement of Age or Gender: If the age or gender of the insured was misstated, the benefits payable may be adjusted to what the premiums paid would have purchased at the correct age or gender.
4. Policy Loan Provision: For policies with a cash value component, this provision allows the policyholder to borrow against the policy's cash value under specified terms.
5. Beneficiary Designation: The right of the policyholder to name or change the beneficiary who will receive the policy's benefits.
6. Reinstatement: This allows a policyholder to reinstate a lapsed policy under certain conditions, such as providing evidence of insurability and paying overdue premiums.
7. Conversion Rights: In certain types of insurance, such as term life insurance, this provision allows the policyholder to convert the policy to a permanent one without providing evidence of insurability.
8. Exclusions: Specific conditions or circumstances under which the policy will not provide benefits, such as suicide within the first two years of the policy or death resulting from participating in illegal activities.

Standard provisions are integral to insurance contracts, ensuring that both the insurer and the insured have a clear understanding of the policy's terms and conditions. They help protect the interests of both parties and provide a basis for resolving any disputes that may arise. Policyholders are encouraged to thoroughly review and understand these provisions to fully grasp the coverage and limitations of their insurance policies.