Search This Website

27 December 2022



Life insurance is simply a legal contract between an insurer and an insurance insured, under which the insurer promises to cover a designated insured sum of money in case of the insured person’s death. Depending on the agreement, payment can also be effected upon death of the insured. In general, there are three types of life insurance: whole life insurance, term life insurances and variable life insurances. These are often broken down further into individual policies for each major type of life insurance coverage. While all three types of life insurances are meant to provide financial security for family members and loved ones in case of an individual’s death, policies differ in the manner in which they provide for the payment of premiums.

Whole life insurance is considered one of the more traditional forms of life insurances. This policy is generally considered a high risk policy. As such premium payments are expected to be quite high, particularly so for people who are older. Because whole life insurance does not feature any specific benefit, the premiums paid may not always be a fixed amount. Instead, they may depend on how long the policy owner lives and how much he or she earns annually.

Term life insurance is less risky than whole life insurance, especially for young people. With term life insurance, however, the insured pays the premiums only for a specified period of time. The policy can be renewed after the expiry of the specified period. Unlike whole life insurance, in which the insured has a fixed premium for his or her lifetime, term life insurance policy holders can choose to renew the policy for an extended period at an agreed cost.

Variable life insurance, also known as universal life insurance, differs from the above two in the manner in which it penalizes loss or damage to the cash value account. This type of policy provides coverage only if the insured has not made a claim during the specified period. In such cases, the value of the cash value account will increase or decrease according to the performance of the stock market. However, the account cannot be negatively affected by events that occur outside the policy’s expiration. Once the policy expires, the cash value is available to the insured only.

નવી પેન્શન યોજના ઓનલાઇન ઉપાડ અંગે ન્યુઝ વાચવા માટે અહી ક્લિક કરો

Unlike life insurance, renewable term life insurance does not guarantee renewability of policies. As soon as an individual ceases to be an eligible policy holder, the policy will expire. Premiums then increase in accordance with the risk level inherent to the individual. These policies are popular with people who wish to borrow against the face value of their policy. The increased premiums due to age, health or death circumstances are rarely of much help.

Regardless of the nature of the insurance product being used, life insausancy is usually considered a more complex and expensive process than life insurance. On the other hand, life insurance has the potential to be extremely profitable. If a well established firm can prove that the process of underwriting and creating a life insausancy policy is relatively simple and inexpensive, the potential for large profits is enormous. The cost of underwriting and creating the life insausancy policy may also be easily offset against the costs involved in underwriting and creating the new policy.

No comments:

Post a Comment

Please Comment Your Questions, Queries or Suggestions