Life insurance is a form of insurance that covers the beneficiaries, or beneficiaries dependents of the insured. The policyholder who are the one insured pays a premium on the insurance, and this is usually done once in a year, twice in a year or once in six months. Once, the insured individual passes away, the insurer has to refund the premiums to the named beneficiaries. Most of the time it is necessary to apply for term insurance before reaching the age of 65 years old as this is considered as an investment opportunity for the insurance company.
In general, insurance companies offer three basic kinds of policies-the whole life insurance policy, term life insurance policy and universal life insurance policy. It is important to know what kind of policy is suitable for you as this will determine how you pay the premiums. Generally, people with a good health are encouraged to go for whole life policies because these protect them from the risk of grave illness and death. Life insurance companies also allow for the flexible options like increasing and decreasing the amount of premiums according to the individual’s needs.
Term insurance is considered as a means of saving against uncertain expenses. It is a cheaper option than other forms of policies and can be purchased for a specific time period. If the insured dies during that time period, the company will not have to pay any money. However, the insured will not be able to borrow money against the policy and hence it will become useless. Term insurance is usually purchased by the employed individuals as they find it convenient and less expensive to pay monthly premiums than the other options available.
There are certain factors which determine the premium rates of term insurance policies. Firstly, the insured person’s occupation, or working history, is taken into account. People who work in areas with high rate of injury may have to pay more premiums than those working in safe places. Similarly, people who have a history of consuming alcohol drink may have to pay higher rates as compared to others.
Secondly, based on the risk factor of an individual, the premium amount of these policies can also be calculated. The standard limit of the policy will be set at a fixed amount and the amount can never be raised. Life insurance policies are generally meant to provide financial assistance to the loved ones or family members after the policy holder’s death, so that they can carry on the lifestyle they are accustomed to and can live peacefully with their debtors. The amount of the policy depends on the sum of money assured and the policy holder’s age, health status and financial position.
In general, the most important information regarding the policy is the name of the policy holder, the date of birth, gender and date of death of the insured. The insured party is also required to sign this document. Another very important document is the premium amount of the policy, which has to be provided at the time of purchase of the policy. The policy is usually guaranteed for a specified period of time, but that time can vary from one policy to another. In some cases the insured party has the option to convert the policy into a whole life insurance policy. This means that the insured pays a lump sum once the policy holder passes away.