Life Insurance for beginners

Cool it. This is an article for those who have absolutely no knowledge about what Life Insurance is all about,…..read on

Life Insurance

– Life Insurance is a contract that promises payment of the sum insured, to the policyholder on the date of maturity of the policy. And in the event the policyholder dies the full amount insured for, is paid to the nominee. No premiums are paid after the expiry of the policyholder.

– There are policies that have a time frame in that a policyholder will opt for certain number of years when premiums are paid. They could be 5,10,15 or 20 years depending on the age of the policyholder. This policy, which is known as endowment policy could be surrendered and the policyholder will be paid after calculating the number of years that the policyholder has paid the premium installments. These endowment policies could be cashed in due to a critical illness, which condition needs to be spelled out at the time of entering into the contract. Endowment policies are a great boon specially when one has events that need heavy expenditure.

– The Life Insurance policyholder needs to pay insurance premiums as prescribed by the company where one has the Life Insurance policy. Unless a policy holder defaults on premium payments, going for a Life Insurance policy is a risk free investment unlike several other investment proposals that have heavy risks.

– For those who find it difficult to save any other way paying out insurance policy premiums is a forced way to save, through easy installments. There are certain Life Insurance policies that qualify as security against loans that a policyholder would want to apply for.

– Some insurance companies have special niches for women of course with some added concessions. There are policies that could be categorized as with profit and no profit. When a policy is with profit the premium amount will be higher as bonuses will be added to the assured sum and those policies that have no profit will have a lower premium. The policies that come under ‘no profit’ will only cover the amount insured for.

– Some organisations choose to insure their key employees and take upon themselves the responsibility to pay the premiums. This is done to protect financial losses due to the key employee’s death or if they choose to leave the company.

– Most insurance companies no longer insist on a medical check up prior to insuring a prospective, which used to be a norm followed in the past. There is an application form, which calls for details and it is expected that the policyholder would be truthful while filling up this application form. Should the insurance company later discover that there has been some fraud they are within their rights to withhold payment of the sum insured.

– Most insurance companies have their brokers and a person interested in getting an insurance policy contacts these brokers. These brokers are dedicated in that they keep a watch on their customers feeding them with updates and also sending reminders so that their customer do not default on payment of the premium installments. Once a deal is finalized the broker earns until the customer continues to pay the premium installments or closes the deal.