Premium Payments

• Premium payments must be made on time. If you fail to pay your premiums, the insurer may cancel your insurance policy. In most states, you have a grace period. This grace period allows you to pay your premiums up to 30 days late. You must catch up on your premiums, however, or your policy will lapse.
  
  

Incontestability Clause

• An incontestability clause may be included in your insurance policy. The clause states that after a certain amount of time has passed (usually two years), the insurance company cannot void your policy even if they find material misstatements. For example, if the insurer never discovers that you had a stroke or some other health problem, they cannot void the contract after the specified time in the clause.
  
  

Exclusions

• Certain exclusions allow the insurer to void the policy contract. Three common exclusions are suicide, aviation and an exclusion for dangerous activities. If you commit suicide within the first two years of the policy, the insurer does not have to pay a claim. An aviation exclusion, which sometimes also includes a "war exclusion," voids the payment of a death benefits if you die in a private plane or you die when you are not the passenger of commercial flight. The war exclusion excludes the payment of death benefits if you die as the result of war. A dangerous activity exclusion would exclude benefit payments if you die as the result of engaging in a dangerous activity such as rock climbing or auto racing.
  
  

Ownership Clause

• The ownership clause of the policy states that you are the owner of the policy and have the right to name beneficiaries, cancel the policy, borrow or withdraw any cash value from the policy and transfer ownership of the policy to someone else (or to a trust).