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. The whole idea of life insurance has developed on the fact that human life is full of uncertainties and life of a person itself is uncertain. For many people, their first exposure with life insurance is when a friend or acquaintance gets an insurance license.
A lot of options and substitutes have to be weighed before you settle on life insurance as your perfect choice. 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.
There are three types of life insurance: Whole life, Universal life, and Term life. Aging of the policyholder is not a determinant factor for the rise in the premium rate payable to the insurance company (and that is the distinctive feature of 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 scope of the duration that is covered by term life is usually limited to the certain extent, and the rates of premiums are relatively cheaper as compared to the other two types.
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 dependents of the deceased are entitled to some money known as 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.
Only someone who has an insurable interest, such as someone in your immediate family can buy you a life insurance policy. All life insurance commodities have certain things in common: They pay your kins a sum of money upon your death, and that money paid is income tax-free. Life insurance being such an enormous task, it is advisable to look for professional assistance from your insurance company or qualified investment person so as get the worthy insights on the matter. After conclusive analysis with the help of professional, you can settle for the best option.
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. The beneficiaries only receive compensation after the death of the insured