Most people buy life insurance these days. They have all realized the importance of life insurance. It is a contract between the insurer and the insured. The insurer promises to pay a decided sum of money to the insured person’s beneficiaries while the insured person promises to pay a certain amount at certain intervals regularly.
The amount which the insured person pays is called the premium and it depends on many factors. First of all it depends on the face value of the insurance. If it is higher and for a shorter period the premium is high. If the face value is less and the insurance is for a longer period of time, the premium is less. It also depends upon the age, the health and other factors which are taken into consideration when a life insurance contract is signed.
Life insurance policy can be bought at any time in a person’s life and for whichever period that is suitable. Some may have insurance cover bought for their family members. Some may buy for themselves. You may choose to have insurance policies which will be like an investment and savings. You can buy a life insurance for a period and when the policy matures you will get the lump sum. You may even get a pension regularly every month once the policy matures. In the event of death of a policy owner, his beneficiaries will get the stipulated lump sum which may be used for funeral expenses, settling debts and the like.
Most life insurance policies cover death by accident or physical disability also. Earlier suicides were not accepted as natural deaths and the beneficiaries came under a cloud of doubt but now this is accepted if it occurs at least two years after the insurance policy has been bought. In the US normally the nominees of the dead person get the full amount in a lump sum. When you buy insurance you have to check out what it covers. There will be a lot of questions asked about you, your health and your financial condition. You will also be asked to name your beneficiary. Normally family members are nominated but it is up to the insured person to decide. He can name anyone as his beneficiary and that person will get the money after the insured person’s death.
You have to pay the premiums regularly so that your insurance policy does not lapse. It may increase with age. The insurer invests the premiums paid by clients so that they can settle the claims and finance their operations. In the US insurance companies can get medical information about the person who is buying the insurance from the Medical Information Bureau.