Insurance life

An insurance life policy is a contract between the insurance company and the insurance life policy holder. The insurer agrees to pay a sum of money as per the contract upon the occurrence of an insured event, which could either be the terminal illness or death of the policy holder. The insurance life policy owner, in return, promises to pay a certain amount of money, called as premium, in installments or in a lump sum. The terms of the contract describes the limitation of the insured events. Certain exclusions are included to limit the liability of the insurer.

Proof of the policy holder’s death has to be submitted to the insurance company before the sum insured and death benefit amounts are paid. In case death has occurred in suspicious circumstances, the insurer may take up investigation of the circumstances leading to death. In certain circumstances, it may refuse to pay the insured amount.

A person insures his life knowing fully well that one day he is bound to die. A policy covers the death of the policy holder, payment for which will be made after his death. There are basically two classes of insurance – Temporary and Permanent. Temporary or Term life insurance provides coverage for a specific period of time for a specific premium. The policy does not accumulate cash value. Permanent coverage remains in force until maturity of the policy unless the owner defaults in payment of premium.

Permanent insurance has the following categories - Whole life – where you have a level premium, guaranteed cash value, death benefits and fixed premiums.

Universal life – where the premiums are flexible and cash value guaranteed.

Endowment – in which the cash value of the policy, equals the death benefit. They premiums are higher as the period is shorter.

Life insurance guarantees that your family and loved ones will be financially protected even in your absence. Coverage of your life ensures that your family receives money in case of your sudden death making certain that your family is financially secure at all times.