Life Insurance Articles

Life insurance is an insurance protection instrument that helps you look after your family even once you are not around anymore. By insuring your life you can save for the future of your relatives, especially if you have family members who are dependent on your income.

Life insurance is a contract between an insurance agency, also called the insurer, and a person who shall benefit from the insurance - the policy owner. According to this life insurance contract, the insurer agrees to pay a predetermined amount of money in case of the policy owner’s death to a beneficiary designated by the latter. In most cases, the beneficiary of the life insurance is not a party to the insurance contract. The beneficiary can be a family member, a friend or any other person designated by the policy owner.

Often, the insurer will also pay the policy owner in other events as well, like a terminal or critical illness. In exchange for such a pay, the policy owner agrees to pay a premium, monthly, yearly or in other intervals, or in a lump sum. Some life insurance policies also provide you with coverage of other expenses related to the policy owner’s death or terminal condition, such as funeral expenses or other related bills and catering. Some exceptions might also apply, for instance the insurer may refuse to be liable for payment in case of policy owner’s suicide.

Life Insurance Cost Factors

The price of a life insurance policy is mainly determined by three factors: gender, age and addiction to tobacco, although other lifestyle and health conditions are included in the underwriting. Depending on the assessment of all these factors most companies have four categories of life insurance:

• Preferred Best is for those individuals who can demonstrate their full health, lack of any adverse medical history and usually, lack of any serious medical conditions in their immediate family;
• Preferred is for people who are under some medication at the time of application and have some family history of illnesses;
• Standard is the category under which most people fall, it is for those individuals, who have a more serious degree of medical history, including their family history;
• Tobacco is a category, which includes people with conditions, that apply to Standard category and who have a tobacco addiction.

Life Insurance Types

There are also several types of life insurance available in the market:

• Term Insurance. Under Term Insurance the policy owner receives life insurance coverage only for a predetermined number of years in exchange for paying a specified amount of premium. Such policy does not allow for cash accumulation.
• Permanent Life Insurance. This type of policy stays in force until it matures unless its terms and conditions were violated. Permanent Life Insurance accumulates cash value.

Other options of life insurance may include accidental death insurance, limited pay life insurance, universal life coverage, mortgage insurance and others.

It is important to do a proper research of the insurance market before selecting the right life insurance for you, as the number of available options is very large.