This is a sample of JMike’s writing – no part of this is endorsed by, or related to Assurance IQ. The links in this document lead to JMike’s home page and are not to be used to refer to or contact Assurance IQ.
Do not sign a contract or insurance policy if you’re unsure of the purpose and provisions in the riders, addendums, or fine print. In fact, you shouldn’t sign if any part of the contract confuses you.
In this article I will address the following topics:
- Confusion
- What is a Rider?
- Where to Add the Rider and Sign it
- Riders Should Meet the Needs of the Policyholder
- Riders And Term Insurance
- Can You Add a Rider to a Life Insurance policy?
- Does a rider supersede the contract?
- What is an Addendum?
- What if the Amendment is Confusing or Ambiguous?
- The Format of the Addendum
- Tips for Writing an Addendum
- The Fine Print
- Understand Your Insurance Fine Print on Cause
Confusion
Make sure that the agent explains every part of the confusion until it is clear and the explanation matches what the contract is saying. That is an important facet – if the explanation contradicts the contract in any way, then the verbal explanation is null and void and the written contract supersedes it. Assurance IQ agents will patiently, completely, and honestly answer your every questions.
If you’re still confused after the explanation or not sure the explanation is accurate, refuse to sign until that part of the contract is explained in a rider, or an addendum, to the contract?
What is a Rider?
In an insurance policy or contract, the rider has nothing to do with bicycles, motorcycles, or public transportation.
Contract riders and addendums are similar documents. Riders are most often used in real estate, insurance, or lawmaking. But there are slight, yet important, differences between them that determine how and when they should be used.
Addendums will be discussed later in this document. For now, let’s concentrate on clearing the mud around riders.
An Assurance IQ contract rider is a document that has additional details, conditions, or terms of the contract. In addition to the standard provisions of your Assurance IQ insurance contract, these are changes or additions added on, known as insurance riders.
For example, in real estate, an attorney may draft a contract rider to supplement a standard Purchase and Sale Agreement. In this case, the rider may outline details such as:
- Where and how a down payment is held
- The date the property will be vacated by the seller
- Property inspections the seller must pay for
These things are typically included in the contract, but if the lawyer has a boilerplate contract, they may be put in a rider. Buyers and sellers may negotiate contract rider terms and both parties sign the document.
Assurance IQ insurance riders are optional, extra terms that go into effect along with your basic policy. Usually at an additional cost. A rider provides additional coverage and added protection against risks. Insurance riders are effective add-ons you can choose in addition to your life insurance policy at economical rates.
Where to Add the Rider and Sign it
Add the rider to the contract either under the applicable section or at the end of the contract terms. Everyone must sign the rider. Signatures go underneath the rider to make it clear that these changes have been agreed upon by everyone.
In other words, if your Assurance IQ policy or contract has three riders, then you must sign in four places – under each rider and at the bottom of the contract.
Just like your original contract, a rider is legally binding. That’s why you must understand the explanation and applicability of the rider. Because riders may be introduced after the original contract is signed, all parties will need to review and approve the changes. This may involve negotiations before everyone can agree. Your Assurance IQ agent will make sure you understand the rider and will lead you through the negotiations.
Riders Should Meet the Needs of the Policyholder
A rider is an insurance policy provision that adds benefits to, or amends the terms of, the basic Assurance IQ insurance policy to provide additional coverage. Assurance IQ riders tailor insurance coverage to meet your needs, the needs of the policyholder. If the benefit doesn’t go to you, then it should not be included in the contract, and not in a rider.
Riders usually come at an extra cost — adding to the cost of your premium. Riders are optional, extra terms that go into effect along with your basic policy, often at an additional cost. A rider provides additional coverage and added protection against risks. Insurance riders are effective add-ons you can choose in addition to your life insurance policy at economical rates. So, check the cost of the rider and determine if it is worth the additional benefit.
Riders And Term Insurance
A term insurance rider provides additional protection or extra cover to a term insurance policy that comes at an added cost. These riders come with additional benefits that can help the insured in many cases.
Choosing riders will increase the effectiveness of a term insurance policy. You can add riders to the insurance policy by paying a little extra premium. As you age, assess the various kinds of risks to your life. You should include corresponding riders in your assessment so that you can enjoy the comprehensive coverage.
However, it is not always essential that all term insurance riders are suitable or needed by everyone. If the benefit doesn’t interest you or confuses you, then it should not be included in the contract, and not in a rider.
Can You Add a Rider to a Life Insurance policy?
Yes, you can add a rider to an existing life insurance policy. Riders cannot be purchased without having a policy beforehand. Your Assurance IQ agent will show you all of the readily available riders that may be applicable to your policy.
Does a rider supersede the contract?
Yes.
While Assurance IQ riders should not change the Assurance IQ basic terms, lawyers typically include language saying the riders supersede anything agreed to in the initial purchase and sale agreement.
What is an Addendum?
There is almost no difference between a “Rider” and an “Addendum.” They both accomplish the same thing. Sometimes the addendums do not need to be individually signed, but not all the time. If you do not need to sign the additional individual addendums, your Assurance IQ will make sure that somewhere in the contract it specifies the scope that includes the listed addendums. It is preferable to have such definitions near the bottom signatures.
An Assurance IQ insurance addendum adds or removes what is included in the coverage of the insurance policy. An Assurance IQ insurance addendum will usually increase the insurance premiums. Insurance addendums are common because most insurance policies are standard templates. The standard policies, with no addendums, might not work well for every individual.
What if the Amendment is Confusing or Ambiguous?
An Assurance IQ addendum is used to clarify and add things that were not initially part of the original contract or agreement. Think of addendums as additions to the original agreement (for example, adding a deadline where none existed in the original contract). Be sure your addendum clarifies rather than confuses its subject.
If you’re still confused after the addendum, or not sure the addendum is accurately and completely clarifying the subject, then refuse to sign until that part of the contract is explained fully in the addendum.
An addendum could be used if the parties, you and the Assurance IQ insurance company or agent, want to add something to the original document. For instance, an individual who is purchasing a house may not want to purchase all of the furniture that is being left behind. However, after thinking about it further, he changes his mind and an addendum is added.
The Format of the Addendum
The participating parties to the contract must be named, usually at the beginning of the contract.Every person needs to sign the contract, the individual riders, and possibly the addendums. Do NOT pay a premium until after all the signatures appear in your copy of the contract.
The contract needs to indicate the addendum’s effective date, using the same date format used in the original contract. Indicate the elements of the original contract that the addendum intends to change. The Assurance IQ addendum concisely but clearly describe the desired changes.
The addendums usually fall at the end of the contract and refer back to the sections it concerns.
Tips for Writing an Addendum
Assurance IQ usually writes the addendum. But an addendum can be created by persons other than the ones who signed the original contract. Like riders, contract addenda are also an addition to a standard contract. An addendum can be used to change, add to, or update the information found in the original contract. They’re usually dated and signed, and refer back to specific parts of the contract.
In some cases, contract riders and addenda may be used interchangeably but it’s recommended that you discuss with your attorney which one might be best to use.
- An addendum should be enforceable. Before you write an addendum, you should have an attorney verify it is the correct solution.
- Use the same formatting as the original contract.
- Use the same language as the original contract and make its voice and wording match the original contract.
- Always give the addendum an appropriate title.
- State the effective date, using the same date format used in the original contract.
- Specifically list all of the changes.
- Write a concluding paragraph usually clearly identifying it as the end of the addendum.
- If the contract’s signature block does not indicate that it also covers the addendum, then add a separate signature block.
An addendum is not an “amendment.” An addendum is a legal and binding part of the contract, while an amendment is not considered part of a contract until it is next negotiated.
The Fine Print
The fine print refers to the very lengthy, wordy contents of the contract. That fine print can surprise you when it’s time to place a claim. Insurance companies use the fine print in your insurance policy to provide reasons to limit or not to pay your claim.
Don’t be bluntly awakened. Read all the fine print before you sign. Don’t let an agent quickly skim over it. You must understand every word of the contract before you sign.
While it’s a good idea to read your insurance policy, hardly anybody does. The important thing is to recognize what’s in it, so it’s best to learn to understand your insurance fine print.
If you don’t completely understand all of the fine print, then have a rider or amendment specify your understanding.
Understand Your Insurance Fine Print on Cause
Many coverage disputes arise from different interpretations of the word “cause”. Even when you have an “all-risk” property policy, it is not enough that the cause and its result (the loss) be covered. There must be a sufficiently close connection between the cause and the loss. This is known as the requirement of “proximate cause.”
Proximate causes are in a natural and continuous sequence, unbroken by any efficient intervening cause, that produces the injury. Without the proximate cause, the result would not occur. This is not to be confused with the “immediate cause,” or cause closest to the injury’s occurrence.
All basic Assurance IQ property insurance policies cover fire damage, but only “special form” policies cover water damage. Nevertheless, if you had a Assurance IQ basic policy and your house burned, the policy would cover water damage from fire hoses. It’s covered because the fire is the “proximate cause” that led to the damage. That is, the water damage would not have occurred without the fire.
Confusion on the cause usually means disputes in a court. Generally, though, whenever a dispute involves ambiguity in a policy’s wording, the court will rule in favor of the insured.