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Life
Insurance Quotes
The term ‘Life Insurance’
refers to an agreement between an insurance provider
and the policy holder whereby the policy holder pays
a certain amount of money at regular intervals and the
insurance provider agrees to pay out an agreed sum of
money to the policy holder’s dependents (usually
family) upon the death of the policy holder.
In some countries, insurance companies have been known
to include catering costs for the funeral in their policy
agreement, but in the UK the main form of life
insurance agreement is to simply have a lump
sum paid to the specified party upon the demise of the
insured person.
Life insurance policies are legal
contracts and the terms mentioned in those contracts
describe the events that the insured person will be
covered for. There are often circumstances of death
that are not covered in a life insurance contract such
as war, suicide, riot or civil commotion.
Life based contracts will usually fall into two different
categories, protection policies and investment policies.
Protection policies are those that provide a benefit
to those parties specified in the contract, usually
a lump sum, in the event of a specified scenario. Investment
policies are where the main objective is to facilitate
the growth of capital by regular or single premiums.
Common forms (in the US anyway) are whole life, universal
life and variable life policies.
The ‘beneficiary’ refers to the person
who will receive the policy proceeds (usually a lump
sum) upon the death of the insured. The beneficiary
can be changed at any time by the policy owner unless
an ‘irrevocable beneficiary’ is designated,
in which case permission must be gained from the beneficiary
regarding any beneficiary changes.
There is a difference between the policy owner and
the insured, although they are usually the same person.
Say a man takes out an insurance policy on his own life;
he is then the policy holder and the insured. However
if his wife takes out a policy for his life, then she
is the policy holder and he is still the insured.
In cases where policy owner differs from the insured,
insurance companies are looking to limit who can take
out a policy for who’s life. This is called an
‘insurable interest requirement’ and it
means that the person taking out the policy would suffer
a genuine loss if the insured should die. This is to
stop people taking out policies on people who they expect
to die and aren’t particularly concerned if they
do or not, and so as not to increase the chances of
murder being committed by someone who has taken out
a policy for someone, and then intends to kill them
to reap the rewards.
As is the case with most general insurance policies,
life insurance is a contract between the insurer and
the insured where a payment is made to pre-designated
parties upon the occurrence of an event covered in the
insurance policy, in the case of life insurance, this
is usually death.
Life
Insurance |
