Life Insurance and Insurance Types

Life Insurance:.
life insurance or commonly life assurance especially in the is a contract between an insured and an insurer or assurer where the insurer promises to pay a designated beneficiary a sum of money in exchange for a premium upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness may also trigger payment. The policy holder typically pays a premium, either regularly or as a lump sum. Other expenses are also sometimes included in the benefits.
Life policies are legal contracts and the terms of the contract describe the limitations of the insured events. Specific exclusions are often written into the contract to limit the liability of the insurer, common examples are claims relating to suicide fraud war, riot and civil commotion.

Life-based contracts tend to fall into two major categories.
1. Protection policies
2.Investment

Term Insurance:.
Term assurance provides life insurance coverage for a specified term. The policy does not accumulate cash value. Term is generally considered pure insurance where the premium buys protection in the event of the death and nothing else.
There are three key factors to be considered in therm insurance:.
1. Face amount.
2. Premium to be paid
3. Length of coverage

Permanent Life Insurance:.
Permanent life insurance is life insurance that remains active until the policy matures unless the owner fails to pay the premium when due. The policy cannot be cancelled by the insurer for any reason except fraudulent application. and any such cancellation must occur within a period of time defined by law.

Whole Life Coverage:.
Whole life insurance provides lifetime death benefit coverage for a level premium in most cases. Premiums are much higher than term insurance at younger ages. but as term insurance premiums rise with age at each renewal, the cumulative value of all premium paid across a lifetime are roughly equal if policies are maintained until average life expectancy.

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