The Rudiments Of Life Insurance - By: Uchenna Ani-Okoye
Life insurance is a means for providing financial protection for your family in the event of your death. A life indemnity contract is relatively straightforward; you agree to pay a premium at regular intervals, and the indemnity company agrees to pay a certain sum of money to your beneficiary upon your death.
There are three parties to a life indemnity contract. First, there is the insured. This is the person whose life is being insured under the policy. Next, there is the insurer. The insurer is the insurance company who underwrites the risk. And third, there is the owner. The owner and insured are not necessarily one and the same. Someone can buy a life insurance policy to insure the life of someone else, such as their spouse.
The person who buys the policy is the owner, and the person whose life the policy is based on is the insured. Whenever the owner and the insured are different people, premium payments are the responsibility of the owner.
Every life indemnity contract also has a beneficiary. This is the person who receives the proceeds from the policy in the event of the death of the insured, and is assigned by the owner. There are two types. An irrevocable beneficiary can not be changed unless the beneficiary gives his or her permission; whenever it is revocable, the owner can change it at any time.
The policy is subject to certain terms and conditions. There are usually certain exclusions that apply, depending on the person being insured. But with almost every policy, death as the result of suicide during the first two years of the policy term is excluded from reportage.
Also, throughout the first two years of the policy, often referred to as the contestable period, the insurance company retains the right to not instantly pay out, even whenever the death is caused through a condition that is covered in the policy. The company can order an investigation into the death of the insured, to make sure that the death was not deliberate or the result of homicide.
The amount paid to the beneficiary is called the face amount. The maturity date is reached upon either the date when the insured deceases or reaches a certain age. Life indemnity is most often used to provide income protection to the spouse of the deceased.
Regardless of the reason for buying the insurance, the owner (whenever not the same person as the insured), must have an insurable interest. In other words, the owner of the contract must have a reason for wanting to insure the life of that person, otherwise the contract is void.
When the person covered through the policy dies, the insurance company calls for proof of death before paying the claim. A notarized death certificate is the most commonly accepted form of proof. The benefit is paid out either as a lump sum or as an annuity that is paid out over time.
Any annuity can be a adept way to receive the benefits. It is possible for the beneficiary to set up a lifetime annuity, which would warrantee that person a certain amount of monthly income for the rest of his or her life.
There are two basic types of life insurance, temporary and permanent. Temporary insurance is known as term life. An example of a term policy would be a 20-year term life, which means that the policy will pay a death benefit whenever the person dies within the next twenty years.
Permanent insurance includes whole life and universal life. Whole life provides for a payout no matter when the person dies, but premiums have to continue to be paid, ordinarily correctly up until the insured reaches the age of 100. Universal policies are somewhat similar, but they allow for greater premium flexibility. Universal insurance is somewhat complicated; you should talk to an agent before buying it.
I hope this info has helped you become acquainted with life insurance. You should sit down with your spouse and talk about buying a policy. Then, call an agent who works for an insurance company with a strong financial rating and make an appointment to discuss your objectives. Use the information that was presented here to aid you makes intelligent choices so your family will be protected in the event that something happens to you.
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Uchenna Ani-Okoye is an internet marketing advisor
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