Monday, 16 February 2015

What Is Life Insurance?


What Is Life Insurance?

Life insurance is a contract between the policy owner and the insurer. The insurer (life insurance Company) agrees to pay a sum of money (death benefit) to a beneficiary when the insured dies or has a terminal or critical illness. The policy owner agrees to pay a premium, (stipulated amount) at regular intervals or in lump sums. The policy owner does not have to be the insured.

Purpose of Life Insurance- To conserve and protect human life value. Human Life Value is the value of a person's future earnings. That individual's or family’s economic existence can be subject to loss through death, retirement, disability, or poor health.

Beneficiary- Chosen by the policyholder, the beneficiary receives the death benefit. There may be more than one beneficiary. There must be an insurable interest between the insured and the beneficiary. Individuals, businesses, trusts, estates, and charities can all be beneficiaries. The policy owner has the right to change the beneficiary at any time for as many times as desired.


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