Insurance can be defined as a process where the policyholder is cushioned by the insurance company if a loss has occurred. Life insurance can be said as a contract in which the insurer, in regard of a premium, either in lump sum or the form of any other periodical payments, in return agrees to pay to the insured, or to the beneficiaries a stated sum of money on the happening of death of the policy owner. Life insurance notion is gradually growing to the current state because of some unpredictability aspects of life. Majority of the people are not exposed to the idea of life insurance; they only get enlightened about it when they stumble onto it courtesy of their friends.
Life insurance is not an easy decision. The dependents of the life insurance policy normally get monetary cushioning after the death of the policyholder. The acquisition of the life insurance policy is not limited to the employer alone; it can also be gotten from an insurance agent.
Life insurance is sub-divided into whole life, universal life and term life. In Whole life insurance, the lifetime coverage at a premium does not increase with your age after you buy it. Should the owner of the universal life insurance decide to change the premiums amount, he/she is allowed to do so. Term life insurance is less expensive than other the other two types mentioned earlier but covers a certain period or of the certain age.
The three main components of life insurance contract are death benefit, a premium pay and, in the case of perpetual life insurance, a cash value account. The death benefit is the amount of payment the insured’s beneficiaries will receive from the insurer upon the death of the insured. Premium payment, though based on statistics, it is the amount of premium needed to cover mortality costs. Cash value account is a savings account that allows the insured to accumulate capital that can become a living benefit.
Only someone who has an insurable interest, such as someone in your immediate family can buy you a life insurance policy. Despite there being different types of life insurance, they still have some features that are similar to all of them such as the money paid to beneficiaries is not taxable and they keep their promise of paying your dependents after your death. Your insurance company or investment professional can assist you to decide what sort of insurance is best for your needs. Once you have done your best to determine your needs, it is advisable to discuss benefit amounts with the professionals who will help you get the right amount of coverage that is best for you.
Many products today offer optional features and services, usually for an additional cost, that you can add to your policy for a customized solution to your planning needs. Money is only paid to the listed dependents after the demise of the insured.