Life Insurance

Endorsement

What Is an Endorsement?

An endorsement may be a signature authorizing the legal transfer of a negotiable instrument between parties, or it can be an amendment to a contract or document, such as a life insurance policy or a driver’s license. A public declaration of support for a person, product, or service is also called an endorsement.

Key Takeaways

  • An endorsement has different meanings, but most have to do with the concept of approval or authorization.
  • An endorsement refers to a signature or an equivalent stamp that authorizes payment or a transfer of funds, as when an individual signs a check.
  • Endorsements can refer to amendments to contracts or documents, such as life insurance policies or driver’s licenses.
  • A public declaration of support for a person, product, or service is also called an endorsement.
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Understanding Endorsements

Understanding Endorsements

While endorsement has several distinct meanings, many of them have to do with the concept of approval or authorization. In business or legal matters, an endorsement refers to a signature or an equivalent stamp that authorizes payment or a transfer of funds, or other financial transaction. It also refers to a note, amendment, or clause to an official document or contract that modifies or specifies terms.

In a more general context, an endorsement is an act of saying or showing that you agree with or support something or someone; the endorser may or may not be compensated. For example, a WNBA basketball player may endorse a pair of Nike-brand shoes in a commercial. Or an actor might endorse a political candidate, appearing at campaign rallies or making speeches.

Types of Endorsements

Signature Endorsements

A signature is an endorsement. For example, when an employer issues a payroll check, it authorizes or endorses the transfer of money from the business account to the employee. The act of signing the check is considered an endorsement, which serves as proof of the payer’s intent to transfer funds to the payee.

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In a financial transaction where one party pays with a check, the person receiving the funds must endorse the check with a signature. A signature on the back of the check indicates that the transaction is complete and allows the transfer of money ordered by the check.

If more than one person is listed as a payee on the check, then the endorsement requirements differ depending on how the names are written. (For example, if the check is written out to John Doe and Jane Doe, both people must sign the check.) If the check is written out to John Doe or Jane Doe, then only one signature is required.

Signing the back of a check to be cashed is called a blank endorsement. Anyone can cash or deposit a check with a blank endorsement, even if the check is not written to that individual.

Insurance Endorsements

Insurance endorsements are amendments in the form of modifications–or additions–to the original policy. For example, a policy provision continuing monthly income to a beneficiary after the death of the insured is an example of an endorsement and is also known as a rider. Typically, this type of endorsement increases the policy premium due to the added benefits to the policyholder and beneficiary and the increased risk to the insurer.

License Endorsements

License endorsements add rights or privileges to a driver. For example, a motorcycle endorsement on a license gives a driver permission to operate a motorcycle on public roads. License endorsements also refer to the types of authorized vehicles or to the type of cargo a vehicle may carry.

The opposite of a license endorsement is a restriction, which forbids certain behavior when driving. For example, someone with a corrective eyewear restriction isn’t allowed to drive without glasses or contact lenses.

Endorsements and Promoting

Endorsements can also represent a show of support or a form of approval. A person or entity may make a public declaration of support for a person, product, or service. Most commonly, such an endorsement occurs when a government official, an influential person, or an organization expresses their support for a political candidate.

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In the U.S., one of the earliest sports celebrities/paid endorsers was Honus Wagner, National League Batting Champion in 1900, 1903, and 1904. In 1905, he signed a contract to promote Louisville Slugger baseball bats (he began his career playing for the Louisville Colonels). Wagner went on to endorse other products, like gum, soda, and razors. But when American Tobacco created a baseball card with his likeness on it to put in their cigarette packs, he asked them to stop. Although Wagner chewed tobacco, he did not want children buying smokes to get his card.

For example, a newspaper may recommend that readers vote for a particular person who is running for office in an upcoming election, publishing an editorial that explains the reasons for their support. The paper is said to be “endorsing” that candidate.

In the field of marketing, supporters or promoters of products are sometimes called “influencers.” Often times influencers leverage social media to market the objects of their support.

What Is an Endorsement with Respect to Insurance?

In insurance, an endorsement is also known as a rider and is an amendment that adds to or modifies the original policy.

What Are Other Kinds of Endorsements?

The signature on the back of a check is an endorsement that authorizes the transfer of funds. A public statement approval for a product or person running for office is another kind of endorsement.

How Do You Endorse a Check?

Simply by signing it on the back. That’s the short answer to how to endorse a check.
That said, there are several variations on the check-endorsement theme. If you just scrawl your signature on the reverse, it’s known as a blank endorsement, and anyone can present the check for payment. If you add the words “for deposit only” beneath your signature—a special endorsement—it limits the check funds to being put into an account.

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If you further add an account number—a restrictive endorsement—it limits the check from going to a specific account. In this era of digital banking, many institutions require checks to be marked as mobile deposits when you endorse them, for further security.

The Bottom Line

An endorsement is an amendment or special clause to a document or contract, an authorizing signature, or a public declaration of support. Specific types include insurance, signature, and license endorsements.

Endorsements also have a commercial meaning, when someone—often a celebrity or public figure—is paid to promote or support a product. This sort of endorsement is centuries old, evolving into the social media influencers of contemporary times.

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