Life Insurance Information Dictionary

Endorsement Definition

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The Dictionary of Insurance Terms and Definitions

An endorsement is any document attached to a life insurance policy which alters the policy's provisions.

Life insurance companies don't write up a custom-made contract for every client.  It's more labor efficient to have a limited selection of standard contracts and allow clients to attach endorsements that modify the terms of the standard contracts.  An endorsement refers to a specific provision in the standard contract and creates or overrides details for it.

Endorsements commonly may be used to extend coverage, reduce coverage, or alter the payment of premiums or benefits.

An example of extending coverage is a spouse rider, which provides coverage for the spouse of the policy's insured individual.  Another example is an accidental death rider, which provides additional proceeds if the insured's cause of death happens to be an accident.

Exclusions are examples of reducing coverage.  For instance, you might attach an endorsement dictating that no death benefit is to be paid if the insured dies in a piloting accident.  Exclusions can reduce the cost of insurance, in some cases scarcely reducing the financial risk of the policy owner.

An example of dictating of premiums are paid is a no-lapse guaranteed benefit rider for a universal life insurance policy.  This rider removes the policyholder's liberty to pay premiums of any amount at any time.

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