Life Insurance is an insurance product that pays at the death of the insured. It really should be called “Death Insurance,” but people don’t like that name. But it insures the death of an individual. Actually, what is insured is the economic loss that would occur at the death of the person insured.
Those economic losses take a lot of different forms, such as:
– the income stream of either “breadwinner” in a family
– the loss of services to the family of a stay-at-home-mom
– the final expenses at the death of a child
– final expenses of an individual after an illness and medical treatment
– “Keyman” coverage, which insures the owner or valuable employee of a business against the economic loss the business would suffer at their death
– estate planning insurance, where a person is insured to pay estate taxes at death
– “Buy and Sell Agreements,” in which life insurance is purchased to fund a business transaction at the untimely death of parties in the transaction
– Accidental death insurance, in which a person buys a policy that pays in case
Life Insurance: A Slice of History
The modern insurance contracts that we have today such as life insurance, originated from the practice of merchants in the 14th century. It has also been acknowledged that different strains of security arrangements have already been in place since time immemorial and somehow, they are akin to insurance contracts in its embryonic form.
The phenomenal growth of life insurance from almost nothing a hundred years ago to its present gigantic proportion is not of the outstanding marvels of present-day business life. Essentially, life insurance became one of the felt necessities of human kind due to the unrelenting demand for economic security, the growing need for social stability, and the clamor for protection against the hazards of cruel-crippling calamities and sudden economic shocks. Insurance is no longer a rich man’s monopoly. Gone are the days when only the social elite are afforded its protection because in this modern era, insurance contracts are riddled with the assured hopes of many families of modest means. It is woven, as it were, into the very nook and cranny of national economy. It touches upon
As a well-aware, net savvy professional, you must be conscious of the need of the life insurance coverage you require to secure your family’s financial life. Today, the provisions of the Income Tax Act offer you provisions under which you can buy life insurance coverage, generate returns and save on tax too.
A large number of people today research for insurance plans online and zero-in on a life insurance plan which is providing best returns, at present. Is that the right approach? Well, it is okay to research and come to know about the best possible life insurance plan.
But, here is the trap. Many people just put all of the insurance money into one single policy. Some insurance agents can urge you to do this. They can show you an online account of one of their clients who has generated returns to the tune of Rs 25-40 per cent in a year. Beware – these are mostly fake accounts which are used to dupe customers. Unfortunately, many insurance buyers fall into this trap.
People buy life insurance policies with a premium amount of as much as Rs 1 -1.5 lakh and then expect that this will bring great returns to them.
Life insurance in the UK is becoming more and more popular with many people now realizing the importance and the benefits of a good life insurance policy. There are two main types of popular life insurance, both of which offer a range of invaluable benefits to UK consumers.
Level Term Life Insurance
Level term life insurance is the most popular type of life insurance policy with UK consumers, and this may be because it is also the cheapest form of insurance. With level term insurance, you and your family can enjoy peace of mind at an affordable price. If you die during the term of this insurance policy, your family will receive a lump sum payment, which can help to cover a number of costs as well as provide some degree of financial security at what will inevitably be a difficult time. The money could assist with costs such as:
- Mortgage repayments
- Funeral costs
- Education costs for the children
- Day-to-day living
One of the reasons that level term life insurance is a fair bit cheaper than other life insurance is because the insurer only has to make a payment if the insured party passes away, and even then the insured party has to die during the term
An all-too-common occurrence for life insurance policy holders is one in which someone purchased a life insurance policy several years ago, they have been paying premiums faithfully, and they unexpectedly receive a Lapse Notice. The Notice states, “… your premium is not enough to cover the policy expenses, please submit (a lot more) money to keep your valuable coverage.”
You’ll probably look to the insurer or agent for help. Here are some things you should consider to maintain your valuable coverage.
Often the policy owner thinks of life insurance the same way they think of auto insurance. They receive a premium notice, they pay the premium amount stated on the notice, and they believe they have met their requirement to secure the coverage. What they don’t realize is that with life insurance plans, such as universal life, indexed life, whole life and variable life, the premium is not the same as the cost.
Premium is what you pay to the insurance company. The policy fees are the cost of the coverage.
With these policies as the insured gets older the life insurance policy costs more. This is where the trouble usually happens. At some point in time, and often unbeknownst to the policy owner,
It’s no secret that the majority of Canadians today don’t really understand the life insurance policies they own or the subject matter altogether. Life insurance is such a vital financial tool and important part to your financial planning that it is incumbent upon you to have a basic level of understanding.
Here are 3 quick pitfalls that are important to be aware of.
Incomplete Details In The Application
All life insurance contracts have a two-year contestability clause which means the insurer can contest a submitted claim within two years of the application date if material information was not disclosed during the application process. If you have forgotten to note a relevant fact in your application pertinent to the claim it is possible that your claim could be denied. Fraudulent acts such as lying in the application would not only have a claim denied but possibly also have your policy rescinded entirely. It goes without saying that one should always be truthful when completing a life insurance contract or any insurance contract for that matter. A copy of the original application often makes a part of the policy and generally supersedes the policy itself. Having-said-that, each insured has a 10-day right to review their
While many of us understand the basic functions of our life insurance policies, it’s not uncommon for questions to arise long after you purchased the policy.
To help address your policy problems, we’ll answer four of the most common life insurance questions to help you gain understanding and control of your life insurance policy.
How do I file a life insurance claim?
To begin the claim process, you’ll need to obtain a couple copies of the policyholder’s death certificate. If you have trouble obtaining copies of the death certificate from the hospital or coroner’s office, your funeral director should be able to get you a copy.
Next, you’ll need to contact your life insurance agent. Your agent will help you complete the necessary paperwork to file the claim. If you’re not sure who the insured’s agent was, you can contact the insurance company directly and someone will help you file the claim. Remember to bring a copy of the death certificate for your agent as it will be needed to ensure quick claim submittal.
How will I receive the death benefit?
Once the life insurance claim is submitted, you’ll need to choose how the life insurance proceeds will be allocated.
According to the Insurance Information Institute
There are various aspects to consider before getting a life insurance policy. One of them is a sustained doubt about the significance and need for life insurance. A life insurance policy is relevant for all individuals who are concerned about the financial future of their family in case of death.
Apart from the purely protectional needs, life insurance policies, like whole and variable life insurance, offer the opportunity for tax-free investment and reaping dividends, and they have a built-in cash value. Purchased with due discretion, it can be utilized as liquid cash to cater to the various needs of policyholders.
There are various types of life insurance policies customized to suit the different needs of various individuals. Depending on the number of dependants and kind of insurance needs, a suitable life insurance policy can be chosen after consultation with financial experts and advisors.
Whole life insurance and term life insurance are the two basic forms of insurance policies. With time, there have been different variations to suit the changing demands of people. A term life insurance policy is also called temporary or short-term life insurance. These are purely protection-oriented and provide death benefits only if the insured dies within the period specified in
“Do I need life insurance?” “Is whole life insurance a good investment?” “Is term life insurance risky?” Questions like these are posted in online communities on a daily basis. The answers vary widely, with the term life and whole life camps polarized. The tone of the debate is surprisingly strident. After all, the topic is insurance–not a something expected to inspire strong opinions, let alone strong language. But words like “rip-off,” “scam,” and “waste of money” fly back and forth, sometimes accompanied by rows of exclamation marks or worse. What is behind the brouhaha? And which camp -if either – is right?
The two sides do not even agree about whether a person needs life insurance. Whole lifers say, yes. You do not want the death of a family member to disrupt your family’s finances or jeopardize its future. It is hard enough to adjust to the loss of a loved one. Adding financial difficulties exacerbates the problem. With the skyrocketing costs of funerals, even children and seniors should have at least a small life insurance policy.
Not so fast, say the term lifers. The only reason to have life insurance is to replace the lost income of a family member who
Considering purchasing convertible term life insurance? How exactly does a convertible term life insurance policy work? Is it possible to find a cheap convertible term life insurance policy? These are all important questions to ask and to understand the answers to before you decide to make the important decision of which type of life insurance coverage to buy.
At the time of deciding what type of life insurance to buy, a person must know every single type offered in the market in order to truly make the best choice for their specific coverage needs. It is true that perhaps many companies simply refer to their policies as term or permanent life insurance, but a person must know that there is much more to that and such is the case of convertible term life insurance. In this article you will be able to know what convertible term is and the many things associated with this type of life insurance.
What Exactly Is Convertible Term Life Insurance?
Life insurance is perhaps easily understood because it simply is a contract between a person and an insurance company. The contract simply states that the person must pay monthly premiums for a certain period of time in exchange
What are some of the life insurance criteria for being approved quickly? Many people are interested in finding a quick approval life insurance policy as they do not want to go through a long and drawn out medical underwriting process. Enforcements and the criteria for people to be approved quickly into life insurance policies within life insurance industry are simply made by the companies so that they don’t lose money when it comes to claims.
For life insurance companies there is a risk associated with insuring someone because you are basically either going to have to end up paying the death benefit of the person that is deceased, or you will gain money by their paying of premiums; however, it’s important to understand that there are applicants that have it easier when it comes to life insurance policies, and that the life insurance criteria for being approved quickly varies according to many factors and is not the same from company to company.
Age Is Perhaps One of the Most Important Criteria to be Approved Quickly For A Life Insurance Policy
Although not all the companies are the same, one of the most important things about life insurance is to try and get the
When families make the decision to purchase life insurance, they are often in the process of experiencing a major life-altering event such as getting married, starting a family, or purchasing a home. In fact, there are many good reasons for purchasing a insurance policy and most of us, at some point in our lives, will realize that owning insurance is very important to ensure our sense of security. Can you even imagine the anxiety of driving on the freeway without auto insurance? All of us know that at some point an accident is almost inevitable. When you purchase life insurance, you are making a plan to be sure your family will be safe from the effects of losing your contribution to the household income
Life insurance insures your life and pays your survivors.
Importance of insurance No one likes to think about the need for life insurance, but if you were no longer in the picture what would happen to the people who depend on you for financial support?. Even if the deceased has some life insurance, the amount is often inadequate. insurance is an essential part of any financial program. Your insurance coverage should be reviewed regularly as changes occur in
Credit insurance is one of the most misunderstood and fraudulently marketed products in the field of personal finance. The types of insurance sold by creditors to debtors range from the old standard credit life and accident and sickness insurance to such worthless contracts as “life events” which will be explained below. Almost all of these policies are grossly overpriced and are a source of substantial profits for lenders and sales finance companies.
The use of insurance as a type of security for a loan or other extension of credit is not an inherently a bad choice. Both the creditor and the debtor can benefit from removing the risk of death or disability from the equation. If the reduced risk is a factor in providing a lower interest rate, or in basic credit approval, it can be a win-win situation. The problem arises, however, when the creditor intimidates or otherwise induces a customer to purchase an insurance product not for its effect on risk but as an additional and substantial source of revenue.
Normally insurance rates are set by the competitive market, which tends to hold rates down at least for the reasonably informed consumer who does some comparison shopping. Automobile insurance companies,
A lot of people have been approached about using life insurance as an investment tool. Do you believe that life insurance is an asset or a liability? I will discuss life insurance which I think is one of the best ways to protect your family. Do you buy term insurance or permanent insurance is the main question that people should consider?
Many people choose term insurance because it is the cheapest and provides the most coverage for a stated period of time such as 5, 10, 15, 20 or 30 years. People are living longer so term insurance may not always be the best investment for everyone. If a person selects the 30 year term option they have the longest period of coverage but that would not be the best for a person in their 20’s because if a 25 year old selects the 30 year term policy then at age 55 the term would end. When the person who is 55 years old and is still in great health but still needs life insurance the cost of insurance for a 55 year old can get extremely expensive. Do you buy term and invest the difference? If you are a disciplined
Life insurance is one of the most important components of any individual’s financial plan. However there is lot of misunderstanding about life insurance, mainly due to the way life insurance products have been sold over the years in India. We have discussed some common mistakes insurance buyers should avoid when buying insurance policies.
1. Underestimating insurance requirement: Many life insurance buyers choose their insurance covers or sum assured, based on the plans their agents want to sell and how much premium they can afford. This a wrong approach. Your insurance requirement is a function of your financial situation, and has nothing do with what products are available. Many insurance buyers use thumb rules like 10 times annual income for cover. Some financial advisers say that a cover of 10 times your annual income is adequate because it gives your family 10 years worth of income, when you are gone. But this is not always correct. Suppose, you have 20 year mortgage or home loan. How will your family pay the EMIs after 10 years, when most of the loan is still outstanding? Suppose you have very young children. Your family will run out of income, when your children need it the