Life InsuranceSome Definitions of Life Insurance
Life Insurance -
Life insurance is a protection against financial loss that would result from the premature death of an insured.
Whole life policy -Whole life insurance is a contract with premiums that includes insurance and investment components. The insurance component pays a predetermined amount when the insured individual dies. The investment component builds accumulated cash value the insured individual can borrow against or withdraw.
Endowment policy -An endowment policy could be a life assurance contract designed to pay a payment once a particular term (on its 'maturity') or on death.
Typical maturities area unit 10, fifteen or twenty years up to a particular regulation.
Some policies additionally pay within the case of important ill health.
Some definitions of Life Insurance
A rider is an add-on provision to a basic insurance policy that provides additional benefits to the policyholder at an additional cost. Standard policies usually leave little room for modification or customization beyond choosing deductibles and coverage amounts Types of Riders 1. Accidental Death Benefit — death due to accident or bodily injury. It doubles the sum assured payable. 2. Accelerated Death Benefit — involves payment of all or a portion of the life insurance policy's face value prior to the insured's death because of the adverse medical condition of the insured. 3. Waiver of Premium - A waiver of premium rider is a clause in an insurance policy that waives the policyholder's obligation to pay any further premiums should he become seriously ill or disabled, so the waiver of premium allows people to benefit from an insurance policy, even when they cannot work. Effect of riders on insurance policies.
When a claim for the advantages of a rider is formed, it can result in the termination of the rider, while the original policy continues to insure you as
2. When a claim for the benefits of a rider is made, it can result in the termination of the entire policy. Mortality Tables A table that shows the rate of deaths, occurring in a defined population, during a selected time interval or survival from birth, to any given age.
Statistics enclosed within the statistical table show the chance of human death before their next birthday, based on their age.
Premium— is the price of the insurance. Premium plans and payment modes
1. Single premium— the premium is paid in one lump sum and once only.
Level premium - the premiums stay identical throughout the period of the contract.
Limited Payment - Premiums on limited payment life insurance paid for a limited number of years. but the benefits last a lifetime.
Premiums area unit owed for ten, 15, or 20 years depending on the policy selected.
You can pay premiums monthly, quarterly, semi-annually, or annually.
Flexible-Premium Plan—the flexibility of deciding the number of premium.
Bonus - bonus is the extra sum which gets accumulated to any insurance policy on a yearly basis which will be paid to the policyholder on the maturity of the plan or in the case of his death. This will be paid on successful completion of all the premiums due for a particular number of years.
a person who compiles and analyzes statistics and uses them to calculate insurance risks and premiums.
Policy Conditions (always to be aligned with the customers' needs)
1. Age—of the life assured is to be admitted before entertaining any claim
2. Days of Grace — after days of grace the policy lapses.
3. Lapse and Non-forfeiture. If premiums are not paid the policy lapses and the benefits under the policy (cover etc.) cease to exist. Some amount may be refunded by the insurance policy which is termed as non-forfeiture amount of the premiums paid.
4. Paid-up value — the value of the premiums that have been paid as reduced by the insurance company after the policy lapses or the surrender value that a policy acquires (normally after 3 years of premium) as calculated by the Insurance Company.
5. Extended Term Assurance — when the policyholder ceases to pay the premiums but keeps the full amount of policy in force for whatever term the cash value permits.
6. Revival - special schemes, installment revival scheme, loan cum revival scheme.
7. Assignment and Nomination- the act of appointing a Nominee to receive the sum assured in case of an insurance event occurs is called Nomination. The benefits of the policy can be assigned to the lender against the policy. In the event of the death of the policyholder, the benefits are first paid to the assignee and the remaining to the nominee.
8. Minor Nominee- minor is considered ineligible for contract and handles the sum assured money. Therefore in case of a nominee being a minor someone needs to be appointed to take care till the minor turns 18 years of age.
9. Surrenders and Loans against policies — surrender value is paid by the insurance company when an insurable event occurs or policy is surrendered voluntarily by the policyholder. Loan against the policy is available in case of traditional life insurance policies subject to surrender value.
10. Foreclosure — in the event a loan is foreclosed which is covered by loan insurance the insurance coverage comes to an end since the insurable interest ceases to exist.
11. Alterations — some policies permit changes in the written document of the policies these are termed as alterations.
12. Indisputability of the policy — if a policy has run a minimum set time, the insurance company cannot dispute any claim under the policy.
13. Restrictions — these are series of exclusions, restrictions or limitations in the policy that is designed to withhold payment under certain circumstances. Settlement of Claims A claim is the payment made by the insurer to the insured or claimant on the occurrence of the event specified in the contract, in return for the premiums paid for the insured. The easy and timely settlement of a valid claim is an important function of an insurance company. Types of Insurance Claims 1. Non-early death claims — made after 3 years from the commencement of the policy.