Firtst Learn About Insurance may be described as a social device to reduce or eliminate risk of life and property. Under the plan of insurance, a large number of people associate themselves by sharing risk, attached to individual.
The risk, which can be insured against include fire, the peril of sea, death, incident, & burglary. Any risk contingent upon these may be insured against at a premium commensurate with the risk involved.
Insurance is actually a contract between 2 parties whereby one party called insurer undertakes in exchange for a fixed sum called premium to pay the other party happening of a certain event.
Insurance is a contract whereby, in return for the payment of premium by the insured, the insurers pay the financial losses suffered by the insured as a result of the occurrence of unforeseen events.
With the help of Insurance, large number of people exposed to a similar risk make contributions to a common fund out of which the losses suffered by the unfortunate few, due to accidental events, are made good.
Sunday, December 23, 2007
Thursday, November 15, 2007
Glossary of Life Insurance Terms
Accident
An event or occurrence causing damage/injury to an entity, and is unforeseen and unintended.
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in instalments on permanent total disability and waiver of subsequent premiums payable under the policy.
Age Limits
Stipulated minimum and maximum ages below and above which the company will not accept applications or may not renew policies.
Agent
An insurance company representative licensed by the state who solicits, negotiates or effects contracts of insurance, and provides service to the policyholder for the insurer.
Annuity Plans
These plans provide for a "pension" ( or a mix of a lumpsum amount and a pension ) to be paid to the policy holder or his spouse. In the event of death of both of them during the policy period, a lumpsum amount is provided for the next of kin.
Application Form
Supplied by the insurance company, usually filled in by the agent and medical examiner (if applicable) on the basis of information received from the applicant. It is signed by the applicant and is part of the insurance policy if it is issued.
Assignment
Assignment means legal transference. A method by which the policy holder can person on his interest to another person. An assignment can be made by an endorsement on the policy document or as a seperate deed. Assignment can be of two types
Conditional absolute
Beneficiary
The person(s) or entity(ies) (e.g. corporation, trust, etc.) named in the policy as the recipient of insurance proceeds upon the death of the insured.
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to an individual. It is issued to indemnify a business for the loss of services of a key employee or a partner who becomes disabled.
Cancelable
A contract of health insurance that may be cancelled during the policy term by the insurer or insured.
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage of insurance to value, will receive a loss payment that is limited to the same ratio which the amount of insurance bears to the amount required;
2) a policy provision frequently found in medical insurance, by which the insured person and the insurer share the covered losses under a policy in a specified ratio, i.e., 80 per cent by the insurer and 20 per cent by the insured.
Convertible Whole Life Policy
A mix of "whole life policy" and "endowment policy", it provides for very low insurance premiums with maximum risk cover while the life assured is just beginning his working career, and the possibiliy of converting the policy to an "endowment" policy after five years of commencement.
Coverage
The scope of protection provided under a contract of insurance; any of several risks covered by a policy.
Days Of Grace
Policy holders are expected to apy premium on due dates. a period is 15-30 days is allowed as grace to make payment of premium; such period is days of grace.
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the time at which the first instalment of pension is received. Such policies generally prescribe a minimum and maximum limit on the deferment period.
Depreciation
A decrease in the value of property over a period of time due to wear and tear or obsolescence. Depreciation is used to determine the actual cash value of property at time of loss.
Double/Triple Cover Plans
These offer to the beneficiaries double/triple the sum assured on death of life assured during the term of the policy. On survival to the date of maturity, the basic sum assured is paid to the assured. These are low-premium plans, most useful for situations such as housing.
Embezzlement
Fraudulent use or taking of another's property or money which has been entrusted to one's care.
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the assured's age at entry and the term of the policy. The insured amount is payable either at the end of specified number of years or upon the death of the insured person, whichever is earlier.
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount, with losses below that amount usually covered by a regular policy.
(2) Insurance to cover an unusual or one-time risk, e.g., damage to a musician's hands or the multiple perils of a convention, for which coverage is unavailable in the normal market.
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits.
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by an insurance company seeking reinsurance.
Family Insurance.
A life insurance policy providing insurance on all or several family members in one contract, generally whole life insurance on the principal breadwinner and small amounts of term insurance on the other spouse and children, including those born after the policy is issued
Fiduciary
A person who holds something in trust for another.
Fire Insurance
Coverage for losses caused by fire and lightning, plus resultant damage caused by smoke and water. Flood insurance Coverage against loss resulting from the flood peril, available at low cost under a programme developed by the Central government.
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a common employer or the members of an association under an arrangement by which the employer or association agrees to collect the premium and remit them to the insurer.
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan Akshay Plan of Life Insurance Corporation of India. This amount is referred to as GIS. The monthly pension that is payable one month after payment of first premium is calculated on the basis of the age at entry.
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance Corporation of India. An annutiy of 1% of the GIVE is payable per month after the deferment period. And the entire GIVE is payable on death after deferment period.
Group Life Insurance
Life insurance usually without medical examination, on a group of people under a master policy. It is typically issued to an employer for the benefit of employees, or to members of an association, for example a professional membership group. The individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed.
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash value of a loss but should be restored to approximately the same financial position as existed before the loss.
Insurable Interest
A condition in which the person applying for insurance and the person who is to receive the policy benefit will suffer an emotional or financial loss, if any untouched event occurs. Without insurable interest, an insurance contract is invalid.
Insurability
All conditions pertaining to individuals that affect their health, susceptibility to injury and life expectancy; an individual's risk profile.
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk over a large enough number of similar exposures to predict the individual chance of loss.
Insured
The person whose life is covered by a policy of insurance.
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on the end of the endowment term or on the first death of the two lives assured, whichever is earlier. Typically (though not a necessity) taken out by a couple, a variation is available for couples only. In this case, the sum assured will be payable on first death and then again on the second death (along with all vested bonuses) if both deaths occur during the term of the policy. If one or both lives survive to the maturity date, the sum assured along with all vested bonuses will be payable on maturity date. Premiums during this plan cease on the first death or the expiry of the selected term, whichever is earlier. Another variation provides for annuity to both/surviving spouse, or a lumpsum amount to the legal heirs.
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was his employee/connected to his business in any manner whatsoever.
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs within this period. Proceeds of the policy are granted to the beneficiaries whenever death of the policy holder occurs. Again, this policy can also be of the "with profits " or "without profits" type.
Loyalty Additions
The loyalty addition is given upon the maturity of the policy, and not before. It's a small percentage of the sum assured. Broadly speaking, loyalty addition is the difference between the performance, of the insurance company and the guaranteed additions. It is LICs effort to further share its surplus after valuation with the policy holders, as LIC is a non-profit organization.
Life Assured
The person whose life is insured by an individual life policy is called life assured.
Maturity
The date upon which the face amount of a life insurance policy , if not previously invoked due to the contingency covered (death), is paid to the policyholder.
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is called maturity claim.
Misrepresentation
Act of making, issuing, circulating or causing to be issued or circulated an estimate, an illustration, a circular or a statement of any kind that does not represent the correct policy terms, dividends or share of surplus or the name or title for any policy or class of policies that does not in fact reflect its true nature.
Money Back Policy
Unlike endowment plans, in money back policies, the policy holder gets periodic "survivance payments" during the term of the policy and a lumpsum amount on surviving its term. In the event of death during the term of the policy, the beneficiary gets the full sum assured, without any deductions for the amounts paid till date, and no further premiums are required to be paid.These type of policies are very popular, since they can be tailored to get large amounts at specific periods as per the needs of the policy holder.
Moral Hazard
Risk depends on the need for insurance, state of health, personal habits standard of living and income of insured peson. Moral hazard is the risk factors that affects the decesion of the insurance company to accept the risk.
Nomination
An act by which the policy holders authorises another person to receive the policy moneys. The person so authorised is called Nominee.
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as the premium is paid from time to time
Premium
The payment, or one of the regular periodic payments, that a policy holder makes to an insurer in exchange for the insurer's obligation to pay benefits upon the occurrence of the contractually-specified contingency (e.g., death).
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid, in the event of th life assured surviving to the end of the policy term. The total sum assured is paid to the beneficiaries in the event death occurs during the policy term.
Reinstatement
The restoration of a lapsed policy to in-force status. Reinstatement can only occur after the expiration of the grace period. The company may require evidence of insurability (and, if health status has changed, deny reinstatement), and will always require payment of the total amount of past due premium.
Risk
The obligation assumed by the insurer when it issues a policy. The spreading of risk across a broad base of the population, adjusted for statistical probability, and the protection against catastrophic loss, is the entire purpose of insurance. For risk assumption purposes, death is viewed as a contingency. That is, although death is certain, its timing is unknown. The process of evaluating and selecting risk is known as underwriting.
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary of the employees by one employer.
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of physical condition, family or personal history of disease, occupation, residence in unhealthy climate or dangerous habits.
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the policy before the maturity of the policy.
Survival Benefit
The payment of sum assured to the incured person which has become due by instalments under a money back policy.
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan.
Whole Life Policy
Premiums are paid throughout the life time of life assured . This can be with profits or without profits ( A "with profit" policy is eligible for various bonuses declared by LIC every year, while a "without profits" policy does not have this privilege )
With-Profit policy
Policies entitled to bonus, which is paid at the time of claim-death or maturity one with-profit policies.
Without-Profit policy
These policies are not entitled to particiapte in bonuses.
An event or occurrence causing damage/injury to an entity, and is unforeseen and unintended.
Accident Benefit
Provides for payment of an additional benefit equal to the sum sum assured in instalments on permanent total disability and waiver of subsequent premiums payable under the policy.
Age Limits
Stipulated minimum and maximum ages below and above which the company will not accept applications or may not renew policies.
Agent
An insurance company representative licensed by the state who solicits, negotiates or effects contracts of insurance, and provides service to the policyholder for the insurer.
Annuity Plans
These plans provide for a "pension" ( or a mix of a lumpsum amount and a pension ) to be paid to the policy holder or his spouse. In the event of death of both of them during the policy period, a lumpsum amount is provided for the next of kin.
Application Form
Supplied by the insurance company, usually filled in by the agent and medical examiner (if applicable) on the basis of information received from the applicant. It is signed by the applicant and is part of the insurance policy if it is issued.
Assignment
Assignment means legal transference. A method by which the policy holder can person on his interest to another person. An assignment can be made by an endorsement on the policy document or as a seperate deed. Assignment can be of two types
Conditional absolute
Beneficiary
The person(s) or entity(ies) (e.g. corporation, trust, etc.) named in the policy as the recipient of insurance proceeds upon the death of the insured.
Business Insurance
A policy which primarily provides coverage of benefits to a business as contrasted to an individual. It is issued to indemnify a business for the loss of services of a key employee or a partner who becomes disabled.
Cancelable
A contract of health insurance that may be cancelled during the policy term by the insurer or insured.
Coinsurance
1) A provision under which an insured who carries less than the stipulated percentage of insurance to value, will receive a loss payment that is limited to the same ratio which the amount of insurance bears to the amount required;
2) a policy provision frequently found in medical insurance, by which the insured person and the insurer share the covered losses under a policy in a specified ratio, i.e., 80 per cent by the insurer and 20 per cent by the insured.
Convertible Whole Life Policy
A mix of "whole life policy" and "endowment policy", it provides for very low insurance premiums with maximum risk cover while the life assured is just beginning his working career, and the possibiliy of converting the policy to an "endowment" policy after five years of commencement.
Coverage
The scope of protection provided under a contract of insurance; any of several risks covered by a policy.
Days Of Grace
Policy holders are expected to apy premium on due dates. a period is 15-30 days is allowed as grace to make payment of premium; such period is days of grace.
Deferment Period
Period between the date of subscription to an insurance-cum-pension policy and the time at which the first instalment of pension is received. Such policies generally prescribe a minimum and maximum limit on the deferment period.
Depreciation
A decrease in the value of property over a period of time due to wear and tear or obsolescence. Depreciation is used to determine the actual cash value of property at time of loss.
Double/Triple Cover Plans
These offer to the beneficiaries double/triple the sum assured on death of life assured during the term of the policy. On survival to the date of maturity, the basic sum assured is paid to the assured. These are low-premium plans, most useful for situations such as housing.
Embezzlement
Fraudulent use or taking of another's property or money which has been entrusted to one's care.
Endowment Policy
The assured has to pay an annual premium which is determined on the basis of the assured's age at entry and the term of the policy. The insured amount is payable either at the end of specified number of years or upon the death of the insured person, whichever is earlier.
Excess And Surplus Insurance
1) Insurance to cover losses above a certain amount, with losses below that amount usually covered by a regular policy.
(2) Insurance to cover an unusual or one-time risk, e.g., damage to a musician's hands or the multiple perils of a convention, for which coverage is unavailable in the normal market.
Exclusions
Specific conditions or circumstances for which the policy will not provide benefits.
Facultative Reinsurance
A type of reinsurance in which the reinsurer can accept or reject any risk presented by an insurance company seeking reinsurance.
Family Insurance.
A life insurance policy providing insurance on all or several family members in one contract, generally whole life insurance on the principal breadwinner and small amounts of term insurance on the other spouse and children, including those born after the policy is issued
Fiduciary
A person who holds something in trust for another.
Fire Insurance
Coverage for losses caused by fire and lightning, plus resultant damage caused by smoke and water. Flood insurance Coverage against loss resulting from the flood peril, available at low cost under a programme developed by the Central government.
Franchise Insurance
A form of insurance in which individual policies are issued to the employees of a common employer or the members of an association under an arrangement by which the employer or association agrees to collect the premium and remit them to the insurer.
Guaranteed Insurance Sum (GIS)
A lump sum purchase price is given to purchase future pensions under the Jeevan Akshay Plan of Life Insurance Corporation of India. This amount is referred to as GIS. The monthly pension that is payable one month after payment of first premium is calculated on the basis of the age at entry.
Gross Insurance Value Element (GIVE)
The amount payable on the deferred date under Jeevan Dhara Life of Life Insurance Corporation of India. An annutiy of 1% of the GIVE is payable per month after the deferment period. And the entire GIVE is payable on death after deferment period.
Group Life Insurance
Life insurance usually without medical examination, on a group of people under a master policy. It is typically issued to an employer for the benefit of employees, or to members of an association, for example a professional membership group. The individual members of the group hold certificates as evidence of their insurance
Guaranteed Policies
These are policies where the payment stays fixed.
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash value of a loss but should be restored to approximately the same financial position as existed before the loss.
Insurable Interest
A condition in which the person applying for insurance and the person who is to receive the policy benefit will suffer an emotional or financial loss, if any untouched event occurs. Without insurable interest, an insurance contract is invalid.
Insurability
All conditions pertaining to individuals that affect their health, susceptibility to injury and life expectancy; an individual's risk profile.
Insurance
Social device for minimizing risk of uncertainty regarding loss by spreading the risk over a large enough number of similar exposures to predict the individual chance of loss.
Insured
The person whose life is covered by a policy of insurance.
Joint Life Endowment Assurance Plans
The sum assured ( plus any accrued bonuses) under this type of policy is payable on the end of the endowment term or on the first death of the two lives assured, whichever is earlier. Typically (though not a necessity) taken out by a couple, a variation is available for couples only. In this case, the sum assured will be payable on first death and then again on the second death (along with all vested bonuses) if both deaths occur during the term of the policy. If one or both lives survive to the maturity date, the sum assured along with all vested bonuses will be payable on maturity date. Premiums during this plan cease on the first death or the expiry of the selected term, whichever is earlier. Another variation provides for annuity to both/surviving spouse, or a lumpsum amount to the legal heirs.
Keyman Insurance Policy
A life insurance policy taken by a person on the life of another person who is or was his employee/connected to his business in any manner whatsoever.
Lapsed Policy
A policy which has terminated and is no longer in force due to non-payment of the premium due
Limited Payment Life Policy
Premiums need to be paid only for a certain number of years or until death if it occurs within this period. Proceeds of the policy are granted to the beneficiaries whenever death of the policy holder occurs. Again, this policy can also be of the "with profits " or "without profits" type.
Loyalty Additions
The loyalty addition is given upon the maturity of the policy, and not before. It's a small percentage of the sum assured. Broadly speaking, loyalty addition is the difference between the performance, of the insurance company and the guaranteed additions. It is LICs effort to further share its surplus after valuation with the policy holders, as LIC is a non-profit organization.
Life Assured
The person whose life is insured by an individual life policy is called life assured.
Maturity
The date upon which the face amount of a life insurance policy , if not previously invoked due to the contingency covered (death), is paid to the policyholder.
Maturity Claim
The Payment to the policy holder at the end of the stipulated term of the policy is called maturity claim.
Misrepresentation
Act of making, issuing, circulating or causing to be issued or circulated an estimate, an illustration, a circular or a statement of any kind that does not represent the correct policy terms, dividends or share of surplus or the name or title for any policy or class of policies that does not in fact reflect its true nature.
Money Back Policy
Unlike endowment plans, in money back policies, the policy holder gets periodic "survivance payments" during the term of the policy and a lumpsum amount on surviving its term. In the event of death during the term of the policy, the beneficiary gets the full sum assured, without any deductions for the amounts paid till date, and no further premiums are required to be paid.These type of policies are very popular, since they can be tailored to get large amounts at specific periods as per the needs of the policy holder.
Moral Hazard
Risk depends on the need for insurance, state of health, personal habits standard of living and income of insured peson. Moral hazard is the risk factors that affects the decesion of the insurance company to accept the risk.
Nomination
An act by which the policy holders authorises another person to receive the policy moneys. The person so authorised is called Nominee.
Non-cancelable policies
Such policies stay in effect regardless of whatever that might happen and as long as the premium is paid from time to time
Premium
The payment, or one of the regular periodic payments, that a policy holder makes to an insurer in exchange for the insurer's obligation to pay benefits upon the occurrence of the contractually-specified contingency (e.g., death).
Premium Back Term Insurance Plans
These provide for refund of all the premiums paid, in the event of th life assured surviving to the end of the policy term. The total sum assured is paid to the beneficiaries in the event death occurs during the policy term.
Reinstatement
The restoration of a lapsed policy to in-force status. Reinstatement can only occur after the expiration of the grace period. The company may require evidence of insurability (and, if health status has changed, deny reinstatement), and will always require payment of the total amount of past due premium.
Risk
The obligation assumed by the insurer when it issues a policy. The spreading of risk across a broad base of the population, adjusted for statistical probability, and the protection against catastrophic loss, is the entire purpose of insurance. For risk assumption purposes, death is viewed as a contingency. That is, although death is certain, its timing is unknown. The process of evaluating and selecting risk is known as underwriting.
Salary Saving Scheme
This scheme provides for payment of premiums by money deduction from the salary of the employees by one employer.
Sub Standard Risk
Person who is considered an under-average or impaired insurance risk because of physical condition, family or personal history of disease, occupation, residence in unhealthy climate or dangerous habits.
Surrender Value
The value payable to the policy holder in the event of his deciding to terminate the policy before the maturity of the policy.
Survival Benefit
The payment of sum assured to the incured person which has become due by instalments under a money back policy.
Vesting Age
The age at which the receipt of pension starts in an insurance-cum-pension plan.
Whole Life Policy
Premiums are paid throughout the life time of life assured . This can be with profits or without profits ( A "with profit" policy is eligible for various bonuses declared by LIC every year, while a "without profits" policy does not have this privilege )
With-Profit policy
Policies entitled to bonus, which is paid at the time of claim-death or maturity one with-profit policies.
Without-Profit policy
These policies are not entitled to particiapte in bonuses.
Wednesday, November 14, 2007
Permanent Life Insurance
Permanent life insurance provides lifelong protection. Permanent insurance is initially more expensive than term insurance.
Permanent insurance is often referred to as cash value insurance because they can build cash value over time (money that you can borrow against and, in some instances,
withdraw to help meet future goals, such as paying for a child's college education,
as well as provide a death benefit to your beneficiaries.)
The premium and death benefit you are quoted at your policy's start remain the
same throughout the policy's life. But because your insurer will be investing your premiums, the policy may also may accumulate a cash reserve. These funds can be put to use as premiums, reinvested, or saved - it's your choice.
Permanent life insurance is distinguished from term insurance in several ways. While term insurance provides protection only for a specific initial period of time, permanent insurance can provide protection for your entire lifetime.
Permanent life insurance policies enjoy favorable tax treatment, meaning that you pay no taxes on any earnings in the policy so long as the policy remains in force.
Who's It For: People who:
1. May need life insurance for a long term.
2. May be interested in accumulating policy cash value to provide funds for
education, retirement or other future goals.
3. Want to take advantage of the tax-favored treatment of cash value.
Benefits: They are:
1. The benefit of whole life insurance is - consistency.
2. You pay the same premium from day one till you're 120.
3. The cash value portion will always be intact and earning some amount of
interest.
4. And the death benefit will never decrease (provided that you don't borrow
against it).
5. Over time, permanent insurance may be more economical than term insurance
and the policy can build a cash value.
6. Earnings from policy may qualify for tax-favored treatment.
7. If you cancel the policy, the accumulated cash value is yours to use as you
wish.
Permanent insurance is often referred to as cash value insurance because they can build cash value over time (money that you can borrow against and, in some instances,
withdraw to help meet future goals, such as paying for a child's college education,
as well as provide a death benefit to your beneficiaries.)
The premium and death benefit you are quoted at your policy's start remain the
same throughout the policy's life. But because your insurer will be investing your premiums, the policy may also may accumulate a cash reserve. These funds can be put to use as premiums, reinvested, or saved - it's your choice.
Permanent life insurance is distinguished from term insurance in several ways. While term insurance provides protection only for a specific initial period of time, permanent insurance can provide protection for your entire lifetime.
Permanent life insurance policies enjoy favorable tax treatment, meaning that you pay no taxes on any earnings in the policy so long as the policy remains in force.
Who's It For: People who:
1. May need life insurance for a long term.
2. May be interested in accumulating policy cash value to provide funds for
education, retirement or other future goals.
3. Want to take advantage of the tax-favored treatment of cash value.
Benefits: They are:
1. The benefit of whole life insurance is - consistency.
2. You pay the same premium from day one till you're 120.
3. The cash value portion will always be intact and earning some amount of
interest.
4. And the death benefit will never decrease (provided that you don't borrow
against it).
5. Over time, permanent insurance may be more economical than term insurance
and the policy can build a cash value.
6. Earnings from policy may qualify for tax-favored treatment.
7. If you cancel the policy, the accumulated cash value is yours to use as you
wish.
Term Life Insurance
Any life insurance policy that covers you for a specific, predetermined amount of time is a term life policy. Should you die during your policy's term, your beneficiaries will receive the payment - should the policy expire before you do, there is no pay out. Term insurance is generally the least expensive and least complicated type of life insurance. It provides insurance protection at a low cost for a specified period of time, such as 1, 10 or 20 years.
With term insurance, you're generally just paying for the death benefit, the lump sum payment your beneficiaries will receive. If you die within the term period, a death benefit is paid to your beneficiary. If you are still living at the end of the term, protection ceases unless the policy is renewed. Term policies are only insurance, they have no cash value or added savings feature.
Who's It For: People with a temporary need for life insurance protection.
Term insurance is often a good choice for people in their family-formation years,
especially if they're on a tight budget, because it allows them to buy high levels
of coverage when the need for protection is often greatest. Those who need a large amount of insurance protection but have limited budgets.
Benefits: They are as follows:
It provides insurance protection for a low cost.
Most Term policies allow you to convert your term policy to a permanent life.
insurance policy without having to take a medical exam or provide other information about your health.
Death benefits are generally received free from income tax.
Drawbacks To Consider: They are as follows:
Premiums generally increase with age and they could become unaffordable later in life.
Once the term period expires, the insurance coverage ceases and the policy has no protection for your life.
If you buy a term policy only to realize at the end of the term that you still have a need for life insurance? Well, it's sort of a good news, bad news story.
Many policies will give you the option to renew your policy when you reach the end of the term but you'll probably face much higher costs since age is one of key factors used to determine life insurance premiums.
Important Questions To Ask: Here are some important questions to ask yourself when considering the purchase of a term policy:
How long can I keep this policy?
Do I have the option to renew the policy or to convert it into a permanent life insurance?
Will I need a medical exam if I want to convert?
When will my premiums increase?
With term insurance, you're generally just paying for the death benefit, the lump sum payment your beneficiaries will receive. If you die within the term period, a death benefit is paid to your beneficiary. If you are still living at the end of the term, protection ceases unless the policy is renewed. Term policies are only insurance, they have no cash value or added savings feature.
Who's It For: People with a temporary need for life insurance protection.
Term insurance is often a good choice for people in their family-formation years,
especially if they're on a tight budget, because it allows them to buy high levels
of coverage when the need for protection is often greatest. Those who need a large amount of insurance protection but have limited budgets.
Benefits: They are as follows:
It provides insurance protection for a low cost.
Most Term policies allow you to convert your term policy to a permanent life.
insurance policy without having to take a medical exam or provide other information about your health.
Death benefits are generally received free from income tax.
Drawbacks To Consider: They are as follows:
Premiums generally increase with age and they could become unaffordable later in life.
Once the term period expires, the insurance coverage ceases and the policy has no protection for your life.
If you buy a term policy only to realize at the end of the term that you still have a need for life insurance? Well, it's sort of a good news, bad news story.
Many policies will give you the option to renew your policy when you reach the end of the term but you'll probably face much higher costs since age is one of key factors used to determine life insurance premiums.
Important Questions To Ask: Here are some important questions to ask yourself when considering the purchase of a term policy:
How long can I keep this policy?
Do I have the option to renew the policy or to convert it into a permanent life insurance?
Will I need a medical exam if I want to convert?
When will my premiums increase?
Types of Life Insurance Policies
There are many choices when it comes to life insurance. Policies are now available from more than 2,000 life insurance companies, banks and other financial institutions.
The two main forms of life insurance available are:
Term Life Insurance or Term Insurance
Permanent Life Insurance or Permanent Insurance
The Question arises Which one is for you? Let us help You find the answer. Please read the steps to decide which policy is best for you, after all its a matter of life. Choosing a policy depends on how long you need the coverage for, How much Premium can you pay.
Term insurance is designed to meet temporary needs. It provides protection for a specific period of time (the "term") and generally pays a benefit only if you die during the term. If you have a temporary protection need, Term Life Insurance may be appropriate. Term life insurance provides death benefit protection for a specified period of time (You might buy a 10-year term policy, or a 15 yr policy or a maximum of 20 yrs).
If you're looking for a coverage for a short period of time, term life makes sense.
This type of insurance often makes sense when you have a need for coverage that will disappear at a specific point in time.
If you expect to need life insurance for a longer duration, even for your lifetime,
then you should consider Permanent Life Insurance. OR If you are interested in using the policy as a form of savings, consider a permanent life insurance policy.
As long as you pay the premiums, and no loans, withdrawals or surrenders are taken, the full face amount will be paid. Because it is designed to last a lifetime,
permanent life insurance accumulates cash value and is priced for you to keep over a long period of time.
We hope we have provided you the basic knowledge regarding choosing a policy. We have tried our best to find the best in industries. Trust us. But we still ask you seek recommendations from friends and professionals such as lawyers and accountants.
Take the time to make sure you fully understand any policy you are considering.
You should be comfortable with the company, agent and product before purchasing anything. Be sure to view the choices and options before you make a final decision.
After you have purchased an insurance policy, keep in mind that you may have a "free-look" period, usually 10 to 30 days after you receive the policy, during which you can change your mind.
The two main forms of life insurance available are:
Term Life Insurance or Term Insurance
Permanent Life Insurance or Permanent Insurance
The Question arises Which one is for you? Let us help You find the answer. Please read the steps to decide which policy is best for you, after all its a matter of life. Choosing a policy depends on how long you need the coverage for, How much Premium can you pay.
Term insurance is designed to meet temporary needs. It provides protection for a specific period of time (the "term") and generally pays a benefit only if you die during the term. If you have a temporary protection need, Term Life Insurance may be appropriate. Term life insurance provides death benefit protection for a specified period of time (You might buy a 10-year term policy, or a 15 yr policy or a maximum of 20 yrs).
If you're looking for a coverage for a short period of time, term life makes sense.
This type of insurance often makes sense when you have a need for coverage that will disappear at a specific point in time.
If you expect to need life insurance for a longer duration, even for your lifetime,
then you should consider Permanent Life Insurance. OR If you are interested in using the policy as a form of savings, consider a permanent life insurance policy.
As long as you pay the premiums, and no loans, withdrawals or surrenders are taken, the full face amount will be paid. Because it is designed to last a lifetime,
permanent life insurance accumulates cash value and is priced for you to keep over a long period of time.
We hope we have provided you the basic knowledge regarding choosing a policy. We have tried our best to find the best in industries. Trust us. But we still ask you seek recommendations from friends and professionals such as lawyers and accountants.
Take the time to make sure you fully understand any policy you are considering.
You should be comfortable with the company, agent and product before purchasing anything. Be sure to view the choices and options before you make a final decision.
After you have purchased an insurance policy, keep in mind that you may have a "free-look" period, usually 10 to 30 days after you receive the policy, during which you can change your mind.
Sunday, November 11, 2007
What is Life Insurance?
Life Insurance : Life insurance is a contract that pledges payment of an amount to the person assured (or his nominee) on the happening of the event insured against. The contract is valid for payment of the insured amount during:
1. The date of maturity, or
2. Specified dates at periodic intervals, or
3. Unfortunate death, if it occurs earlier.
Among other things, the contract also provides for the payment of premium periodically to the Corporation by the policyholder. Life insurance is universally acknowledged to be an institution, which eliminates 'risk', substituting certainty for uncertainty and comes to the timely aid of the family in the unfortunate event of death of the breadwinner.
By and large, life insurance is civilisation's partial solution to the problems caused by death. Life insurance, in short, is concerned with two hazards that stand across the life-path of every person:
1. That of dying prematurely leaving a dependent family to fend for itself.
2. That of living till old age without visible means of support.
Indian Insurance Industry
Insurance Policies from Different Indian Insurance Companies.
1. The date of maturity, or
2. Specified dates at periodic intervals, or
3. Unfortunate death, if it occurs earlier.
Among other things, the contract also provides for the payment of premium periodically to the Corporation by the policyholder. Life insurance is universally acknowledged to be an institution, which eliminates 'risk', substituting certainty for uncertainty and comes to the timely aid of the family in the unfortunate event of death of the breadwinner.
By and large, life insurance is civilisation's partial solution to the problems caused by death. Life insurance, in short, is concerned with two hazards that stand across the life-path of every person:
1. That of dying prematurely leaving a dependent family to fend for itself.
2. That of living till old age without visible means of support.
Indian Insurance Industry
Insurance Policies from Different Indian Insurance Companies.
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