Overview 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 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.
For one to decide to acquire a life insurance policy, serious thinking has to be done. The dependents of the life insurance policy normally get monetary cushioning after the death of the policyholder. The coverage of life assurance is often provided by the employers, but can also be purchased through an insurance agent.
There exist three types of life insurance policy, and they are 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. 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. There is always money paid to the listed beneficiaries upon maturity of the contract, and this money is called the death benefit. 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.
A stranger cannot purchase a policy to insure your life. 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. Professional investment managers or your insurance company can be sought in order to get clear understanding of the venture you are about to get into. 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.