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It is important to understand that life insurance is a contract that promises the payment of a specific sum of money to a beneficiary, when the insured dies.

The following are 8 legal issues that every life insurance policy must address:

1.- A typical life insurance policy must determine who the parties to the contract are. The life insurance policy is a legal contract issued by the insurer after receiving the application and payment of premiums.

2.- A typical life insurance policy must explain the need for an insurable interest on the part of the owner of the policy in the life of the insured. Simply, to insure the life of an individual, the applicant must have an insurable interest.

3.- The life insurance contract is highly oriented towards consumer protection and unique in contract law.

Random: means that the promise of the insurer to pay the benefits of the policy is conditional on the event of the death of the insured within the terms of the contract.

One-sided: because it describes the fact that the insurance company is the only party to the contract that makes a legal promise. The insurer promises to pay a specific amount if the insured dies while the policy remains in force.

Adhesion: it is a legal acknowledgment that the policy holder is not in a position to negotiate with the insurer on the terms of the contract and the resulting document is not evidence of the normal “give and take” negotiation found in a contract standard.

4.- The revocable beneficiary is the one that can be changed, or revoked at any time during the life of the policy. An irrevocable beneficiary is one that cannot be changed by the policy owner / insured without their own consent. Said beneficiary has a lifetime right to the death benefit.

5.- A typical life insurance policy should limit the right of the insurer to challenge the validity of the contract after (generally) two years, even if the insured made a statement, or provided fraudulent material when acquiring the policy.

6.- A typical life insurance policy must provide a grace period of one month for the payment of premiums. Payment of the premium is a precondition for the insurer to be able to pay a death claim.

7.- A typical life insurance policy should limit the insurer's obligations to pay death benefits, if the insured commits suicide within the first two years of the policy.

8.- A typical life insurance policy should provide for an adjustment in the death benefit in case the age of the insured is wrong. Mortality can vary considerably with age.

The company trusts the applicant and for the convenience of both parties, the birth certificate, or other proof, is not required at the time of purchase.

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