|
Everything You Need To Know About Life Insurance
By: Peter Wise
Life insurance is a type of protection that can be bought and insures the buyer
in the event of death. The risk that is assumed by the insurer is the risk of
death of the insured. Life insurance is a very good purchase in order to protect
a family, especially if you are the sole breadwinner. Additionally, life
insurance can help pay for funeral costs and therefore ensure that your death
will not be a financial burden for your family.
It is important to understand the process of life insurance in order to truly
grasp its value. A life insurance transaction has three parties: the insured,
the insurer, and the owner of the policy (the insured and owner of the policy
are often the same person). One of the most important parties involved with life
insurance is the beneficiary. The beneficiary receives the policy proceeds upon
the death of the insured. Only the owner of the policy can change the
beneficiary. If the beneficiary is an irrevocable beneficiary, then any changes
in beneficiary must be agreed to by the irrevocable beneficiary.
In order to solidify a life insurance plan with an insurer, the insurer must
evaluate the insured’s lifestyle. The insurer evaluates the risk of insuring the
customer. Some insurance companies will not grant insurance to people with
serious health issues, or extreme lifestyles. Insurance companies charge
differing amounts for life insurance based on the risk evaluation. Part of the
risk evaluation is a health evaluation. There are for categories for people
seeking life insurance: Preferred Best, Preferred, Standard, and Tobacco. Having
no family history of illness or early cancer, and being extremely healthy and
active can result in a Preferred Best rating. Depending on lifestyles, and
family histories, a person is slowly moved down the ladder. It is easy to move
down the categories but almost impossible to move up a category.
Life insurance is a legal contract that has terms and conditions. In the event
of the suicide of the insured, most insurance companies will declare the policy
null and void. Misrepresentation by the owner or insured on the life insurance
application is also a plausible reason for the policy to be nullified. Insurance
companies are entitled to know the circumstances of the insured’s death and can
decide whether or not the policy should be nullified if there is suspicion of
suicide. A death certificate must be shown to the insurer to prove the death of
the insured.
As with any insurance policy, life insurance takes a substantial amount of time
to mature. Once matured, the “face value” of the policy is given. A policy
matures upon the death of the insured, or when the insured reaches a certain
age. Depending on the policy, the insured can make differing amounts of payments
over time. As with all insurances, failed payments result in the termination of
the insurance.
Life insurance is a very good thing to have because it protects your family’s
financial well-being. In the event that you were the sole worker, life insurance
can pay your family your salary for many years (depending on the policy). Life
insurance can also cover the costs of funerals and therefore your death won’t be
a burden on your family.
About the Author:
Peter Wise is interested in financial matters and writes for Life Insurance
Lowdown ( http://www.lifeinsurancelowdown.com ). |
