Friday, June 12, 2009
LIFE INSURANCE
Life insurance is defined as an agreement between a policyholder and an insurer where the insurer is liable to pay to the beneficiary an amount in then event of the death of the policyholder. Life insurance is very important in every person’s life as it provide many benefits.
One of the most important reasons for purchasing life insurance is it helps to reduce the financial problem that can occur due to the death of the wage earner of the family. When the policyholder dies the premium that he or she paid is used to pay off the beneficiary to provide the financial support.
Another important use of life insurance is to disburse the debts. When a person dies the debts like credit card, mortgage, medical bills etc. remain unpaid. In that case, the money received from the insurance company can be used to pay off debts. Otherwise, the beneficiary has to sell the assets to pay of debts.
Life insurance is a vast subject and a person should know the types of life insurance available with the insurance companies before applying for it.
Level Term insurance – This type of insurance pays a huge amount to the beneficiary on the death of the policyholder.
Mortgage Protection – This type of insurance policy covers capital and interest mortgage, if the policyholder dies too early. Here the amount that is payable to the beneficiary decreases along with the mortgage dues.
Critical Illness – This type of insurance policies covers those people who are suffering from the critical diseases like cancer, a heart attack etc.
A life insurance policy consists of three things:
Provisions – Its tells about overall features of the contract along with the benefits, conditions and the requirements.
Options – This helps an individual to make choices about different characteristic of the policy.
Riders – It means additional coverage.
This is all about life insurance in brief
One of the most important reasons for purchasing life insurance is it helps to reduce the financial problem that can occur due to the death of the wage earner of the family. When the policyholder dies the premium that he or she paid is used to pay off the beneficiary to provide the financial support.
Another important use of life insurance is to disburse the debts. When a person dies the debts like credit card, mortgage, medical bills etc. remain unpaid. In that case, the money received from the insurance company can be used to pay off debts. Otherwise, the beneficiary has to sell the assets to pay of debts.
Life insurance is a vast subject and a person should know the types of life insurance available with the insurance companies before applying for it.
Level Term insurance – This type of insurance pays a huge amount to the beneficiary on the death of the policyholder.
Mortgage Protection – This type of insurance policy covers capital and interest mortgage, if the policyholder dies too early. Here the amount that is payable to the beneficiary decreases along with the mortgage dues.
Critical Illness – This type of insurance policies covers those people who are suffering from the critical diseases like cancer, a heart attack etc.
A life insurance policy consists of three things:
Provisions – Its tells about overall features of the contract along with the benefits, conditions and the requirements.
Options – This helps an individual to make choices about different characteristic of the policy.
Riders – It means additional coverage.
This is all about life insurance in brief
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