The Basic Concept Of Life Insurance
Insurance can be defined as a process where the policyholder is cushioned by the insurance company if a loss has occurred. Life insurance is an agreement in which one party agrees to pay a given sum of money upon the termination of life of the policyholder to the beneficiaries of the holder. Life is very unpredictable and so is the human life too, and these two considerations are the driving force behind the growth of life insurance. It takes pestering and persuasion from friends to convince their peers about the importance of life insurance.
A lot of options and substitutes have to be weighed before you settle on life insurance as your perfect choice. Typically, life insurance provides money to beneficiaries after an insured loved-one dies. Life insurance policy can be accessed either via your employer or you can opt to get it from an insurance policy broker.
There are three types of life insurance: Whole life, Universal life, and Term life. As the age of the policyholder advance, the set and the agreed rate of paying the premiums do not change in whole life insurance. Should the owner of the universal life insurance decide to change the premiums amount, he/she is allowed to do so. The cheap rates and the limitation of time covered by the policy is what differentiates term life from the other two categories.
For life insurance contract to be fully viable, it must be made of the following three parts; death benefit, a premium payment, and 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. The calculated amount of money to be paid on demise of the policyholder is referred to as premium payment. The account, where the money accumulates so that it can be used for its intended purpose, is what is referred to as cash value account.
Any person not identified as your next-of-kin, can’t procure a life insurance policy on your behalf. 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. On exhaustion of all avenues select the right product.
The different types of products available in life insurance are made in such a way that they accommodate your financial wants. Money is only paid to the listed dependents after the demise of the insured.