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Life insurance is a contract between the issuer and the policy owner where the issuer will give a financial sum at the event of the death of the policy holder or any unforeseen consequemces such as accidents which may lead to death. Up till the point the policy owner expires he has to pay premiums to the policy owner. These premiums are paid to the policy holder annually so as to enable feasibility of payments and at the same time to acquire the benefits of the insurance policy.
Life insurances tend to focus on protection and investment. Protection life insurance is made to meet the demands of security for unforeseen consequences such as accidents which might lead to death. Investment life insurance designed to meet the premium needs of the issuer that enables investment growth in terms of the premiums that are paid to him to issuer. With these premiums the issuer can further invest them to generate profit and create insurance for individuals.
The parties to a life insurance consists of three people only- policy owner, the insured and insurer. The policy owner is not making a policy for himself but for the person that is going to hold the insurance after he expires. Therefore within his presence the insured gets to know what are the terms and conditions of the policy. For example, if John would like to secure a life insurance for his wife Catherine, he would need her in the presence of the policy issuer in order to sign the contract. This will also enable the policy issuer an insight as to whom he should contact after the demise of John.
However the incidence of death varies in the terms and conditions of a life insurance as the contract terms of insurance may provide on the cause of death. If the policy holder commits suicide then the policy statement will be considered null as it is not applicable to the agreement. If any means are used to procuring the life insurance through the misrepresentation of information then the insurance policy will be declared as null. Other terms include the stipulated period of the insurance which should not expire before a person passes the age of 100 years. If he does he would have to renew the terms again.
On the insured’s death evidence has to be brought about by a death certificate from a doctor, declaring the causes of death and that thorough examinations were done in terms of the symptoms of death. This information would provide enough proof along with other documentations that were submitted when the person was to be insured.
Life insurance is of two types permanent and temporary. Permanent life insurance is for life-time where the insured would get insurance guarantee throughout the life time of the individual. Any event of death will procure the insurer with the insurance. Whereas temporary insurance is only for a stipulated time of year that the individual will get insurance if there is an occurrence of death within the period.
Thus life insurance is a guarantee to leading a troubled free life by facing the unforeseen consequences that life brings with it. |
