Insurance Contract

An insurance contract consists of two components:

  1. policy application
    • doesn't need to be attached but often is
    • the policy prevails over the application
  2. the policy contract, including
    • attachments at issue
      • e.g., riders
    • amendments after issue
      • e.g., additional riders

Policy illustrations are not part of the insurance contract. In case of discrepancies, the policy contract takes precedence over the policy application.

There are requirements for a valid insurance contract. There is contractual protection for you as the policyowner.

The Parties


There are two legal parties to an insurance contract

  1. the insurer
    • provides the contract of insurance
  2. the insured (the policyowner)
    • the party protected
    • makes the contract with the insurer

The beneficiary is not a party and neither is the life insured (unless also the policyowner).

Contract Flaws

Flaws may make the insurance contract void or voidable.

Void (Fatal Flaw)

A void contract is invalid from the outset and cannot be corrected. For example, the client commits fraud.


A voidable contract can be voided by either party or corrected. The contract remains valid until rescinded or made void ("avoided"). For example

Premiums may not be returned.

PS Network

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