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 insurance notion is gradually growing to the current state because of some unpredictability aspects of life. It takes pestering and persuasion from friends to convince their peers about the importance of life insurance.
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.
There are three types of life insurance: 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. The rules governing the rates of the premiums are liberal when it comes to universal life insurance as one can alter them as he/she desires. 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.
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.
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. 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.
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