Aspects That Constitute 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. 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. It takes pestering and persuasion from friends to convince their peers about the importance of life insurance.
For one to decide to acquire a life insurance policy, serious thinking has to be done. Typically, life insurance provides money to beneficiaries after an insured loved-one dies. 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.
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. Premium payment, though based on statistics, it is the amount of premium needed to cover mortality costs. 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. Financial disbursement to the ones you left behind and the money paid to be tax-free, are the peculiar traits of life insurance. 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. On exhaustion of all avenues select the right product.
At an extra cost, of course, other services can be incorporated in your product choice so as to meet your desires. Money is only paid to the listed dependents after the demise of the insured.