Sitting down with a legal contract can seem overwhelming at first, especially if it contains a lot of elements that you’re not yet familiar with. At the same time, when you’re making an important financial decision like getting a life insurance policy, it’s important that you understand exactly what you’re signing up for.

That’s why we took the time to deconstruct a life insurance policy document to help identify the key sections you’ll need to read through before you move forward.

What is a life insurance policy?

A life insurance policy document is a legal agreement between an insurance company (insurer) and the policyholder (insured). It specifies the terms and conditions of the coverage provided in exchange for the premiums paid. It also includes limitations, exclusions, and other terms and conditions.

Why a life insurance policy is important

Serves as a legal document: To your family and dependents, this policy document symbolizes your commitment to their welfare and security. 

Puts details all in one place: The policy document includes all the policy’s terms and conditions. It’s vital to share these details with your loved ones, including your children and spouse. They should be informed about the policy’s benefits and the steps needed to manage claims, should a circumstance necessitate it.