What must an insurer do if they wish to change the terms of a life insurance policy?

When an insurer wishes to change the terms of a life insurance policy, obtaining consent from the policyholder is a crucial step in the process. This requirement is rooted in the principles of contract law and consumer protection. A life insurance policy is a legally binding contract between the insurer and the policyholder, and any modifications to that contract necessitate the agreement of both parties.

The need for consent helps ensure that policyholders are fully aware of and agree to any alterations that may affect their coverage, premiums, benefits, or other essential terms of the policy. This protects the rights and interests of the policyholder by providing them with a clear understanding of the implications of any changes and the opportunity to negotiate or refuse the modifications if they find them unsatisfactory.

In contrast, simply notifying the policyholder, informing them only upon request, or changing the terms without notification would not fulfill the legal and ethical obligations of the insurer and could lead to disputes or potential legal issues if the policyholder feels that their rights have been violated. Thus, obtaining consent is critical for maintaining trust and ensuring transparent communication between the insurer and the policyholder.