Know Your Life Insurance

Written By: Jeff Cline on December 11, 2009 No Comment

A type of insurance which covers the life of a person is known as Life Insurance. It is a contract between an insured person and an insurance company which may either be a government agency or a private company.

It is a contractual agreement between an individual and an insurance company whereby an insurance company pays a certain sum of money after the death of the policy holder. The policy holder on the other hand during his life time pays a premium to the insurance company.

In most cases, money is paid if insured events take place. By insured events it is meant that the death of the person who purchased the insurance is because of the events that have been specified in the contract. The most common type of insured event that is specified in a contract is serious illness.

There are different types of life insurance policies that people can opt for on the basis of their requirements. Before selecting any type of policy, all types of policies must be compared and the most feasible one must be chosen.

A term life insurance plan is the most commonly used life plan that is opted for by many people. Also known as a temporary life policy, this plan covers the life of the insured person for a specified period of time. This period may be 5 years, 10 years or even 20 years. During the term of the policy, if the person insured dies, the insurance company pays the sum of money to people who have been named as beneficiaries in the contract. On the other hand, if the term of the policy ends and the policy is not renewed, the beneficiaries are not paid any cash benefits.

Another type of a life policy is the whole Life Insurance policy which covers the insured person for his entire life. According to this policy, when the insured person dies, a certain sum of money is paid to the beneficiaries named in the contract.

The premium for term life policy stays the same as the value of this policy is divided over many years. In this life insurance plan, cash benefits accrue over a period of time and are paid in lump sum.

Universal life insurance is the type of life policy in which the insured person is covered till his death. The value of this policy is divided into cash and death benefits. The cash benefits in this type of policy do not accrue over time and can be withdrawn as and when required by the policy holder.

Learn more about Life Insurance. Stop by Jeff Cline’s site where you can find out all about Life Insurance and what it can do for you.