Life Insurance

By Anna Lynn C. Sibal

Life insurance is protection that a person may opt to buy to shield his or her loved ones in the event that he or she dies an accidental death or from a sudden illness. Life insurance can be seen as putting money aside for hospital or funeral expenses when the insured person dies unexpectedly, and for replacing what income may be lost to the insured person’s dependents or beneficiaries in that unexpected death.

Life insurance is different from life assurance, although the distinction is being blurred nowadays by companies who offer both and yet choose only one name for their offered protection policies. Life insurance is protection against the risk of dying from unforeseen causes. We all know that we are going to die someday, but when we get life insurance for ourselves, we are saying that we might die before our time through ways that we may not be able to foretell.

On the other hand, life assurance is preparation for the inevitable. We all know that we are going to die someday; when we get life assurance, we are preparing for that eventuality gradually. There is no payout for risk of accidental death or sudden death from illness in life assurance.

Just like in any other type of insurance policy, the insured person pays a premium to the insuring company on a regular basis, beginning at the time he or she signs into validity the policy agreement. This policy serves as the contract between the insurer and the insured person. The insured person also names his or her beneficiary for the policy; the beneficiary is the one who will receive all the money that is due at the maturation of the policy.

Because the specifics of what is to be covered and protected by a home insurance plan should be listed, there are different types of home insurance plans according to their riders, the riders being additional clauses of protection to the policy. These kinds of home insurance policies are:

For a beneficiary to be able to collect the life insurance benefits, he or she must present the insured’s death certificate and a fully accomplished and notarized claim form. The insuring company has the right to investigate the events surrounding the death, especially if the amount involved has considerable value and if the death occurred before the contestability period of two years has passed.

There are different forms of life insurance, but these forms are divided into two basic groups: temporary or term life insurance, and permanent insurance.

Term life insurance is a form of insurance in which the insured person is protected from the risk of unexpected death for a specific period of time and for a specific amount of premium. The specified period of coverage is called term, which is usually designated as one year. The term life insurance policy can be renewed whenever the policy is due to expire. Term life insurance is protection against the risk of unexpected death and nothing else.

Permanent life insurance, or universal life insurance, on the other hand, is a type of life insurance that remains valid until the event of the insured person’s death. A permanent life insurance policy cannot be cancelled unless it is found to be fraudulent during the two-year contestation period, or when the owner of the policy fails to pay the premium, which would cause the policy to expire. The insuring company allows the owner of the policy to withdraw or borrow money from the cash value of the policy. It is also possible for the owner to surrender the policy and receive the amount due if the policy is surrendered.

Life insurance policies are vulnerable to exploitation despite the effort insuring companies exert in determining the validity of the policy. This is most true if the maturation amount is considerably large – it presents a temptation for the beneficiaries to kill the insured to get the money after the contestation period. There are also documentations of deaths being faked so the value of the life insurance policy can be claimed.