In the fast paced and very fragile life style and life span we have today, insuring life itself has become a necessity. Life insurance is an agreement or contract signed by the owner of the policy and the insuring company.

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The life insurance agreement is such that the insuring company acts upon the pre set sum of payment in event of an untoward occurrence of death of the insured individual. This agreement is backed by the payment made in stallemnts for a pre set and calculated time frame by the policy owner or policy payer. The stipulated amount is also referred to as the ‘premium’ and is paid at pre determined regular intervals. The insurance premium can also be paid in a lump sum or "paid up" insurance amount. In some life insurance agreements, the claims also cover the assets, bills and death expenses and the catering after the funeral. However, this is so only if the agreement document covers the expenses that are in turn paid for within the Policy Premium.

In the case of an individual who has lost an isnured spouse, the person is compensated one full years wages of the deceased, in addition to the claim. The insurance policy is primarily the contract between the insuring company and the owner of the policy, by which there is a benefit paid to the beneficiary designated by the policy holder in event of the insured event, accident or even death. The insured events could include death, sickness or incapacitation or natural or accidental death. Life isnurance policies are contracts covered by the law and the terms of the insurance policy are drawn on the basis of the limitations of the insured events that are to be covered via the premiums.

The claims usually include specific exclusions in the fine print, to eliminate and limit the liability of the insuring company. These include claims relating to suicide, cases of fraud, events unfolded due to war or riots or any kind of civil commotion. The contracts between the insured and the insuring company are included into two major categories. The ‘protection’ policy is designed to provide benefit in the event of some pre determined and specified event. The premium payment towards such a claim is usually a lump sum amount. On the other hand, the ‘investment’ policy is designed to facilitate the growth of capital with the help of regular premium payment.

 


There are other common forms of life insurance policies like the whole life isnurance policy, universal life insurance policy and the variable life insurance policy. These are all designed to meet the specific needs of the individual and the payment capacity of each. There are a number of private and government run insurance agents and companies that cover individuals and families, the world over. The beneficiary is payable only after the death of the insured person. The policy proceeds are forwarded to the person designated as ‘beneficiary’, by the owner of the policy. It is important to note that the beneficiary is not a party to the policy in any way. The owner has the right to change the nomination of the beneficiary initially namedd in the policy, unless the policy specifies otherwise.

In the case of agreement to the ‘irrevocable beneficiary designation’, the beneficiary has to agree to changes in designation, policy or cash value borrowing, prior to any adjustment. The special provisions within the life insurance policies may include the suicide clause. This does not cover any claim if the insured person commits suicide within two years of taking the policy. The ‘face’ value of the life insurance policy is the amount payable within the terms and agreement of the policy at the time of death of the insured person or on the date of policy maturity. The insuring company calculates the policy amount and price to be able to fund the claim and the administrative costs involved and make an overall profit. The cost of the life insurance policy is determined with the help of a pre-determined mortality table, with reference to the actual situation.

 

 

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