Insurance Policy Report

Life Insurance Policy - Some Aspects To Consider

If life is precious, so is money. Some people tend to think that opting for a life insurance policy is a waste of hard earned money. Some others consider it as a necessary evil. You are free to take your own decision on this issue.

But stop to think about the following aspects of a life insurance policy before you take the right decision in your specific case, whatever it is.

A life insurance policy is a contract between a life insurance company (the insurer) and a person (the policy owner or the insured/policy holder). As per stipulations in the contract, the insurer promises to pay a certain well-defined sum of money, known as a benefit, in the event of the insured's natural death, accidental death, or death due to sickness. These benefits are paid to the beneficiary designated clearly in the contract after a detailed investigation of the insurance claim is made by the insurance company and cleared. Murder of the insured or suicide by the insured will result in the insurance claim not being cleared by the insurance company and the claim amount not being paid. The policy owner is the person who pays a periodic sum of money (premium) to the insurance company. The policy owner may be the same as the insured/policy holder or may be different. The policy owner may well be different and also be the beneficiary as per the contract. Such a policy owner needs to have an insurable interest in the insured. Otherwise he/she cannot be allowed to become the beneficiary. Persons with insurable interest are either close family members or persons (business partners of the insured) who will endure some kind of loss in case the insured dies. There are many variants of a life insurance policy. There is the term life, whole life, universal life, and variable life insurance policy. You can know more about all these on the Internet. Some of these policies are available as an investment vehicle. Others provide tax breaks. Yet others provide solely protection if the insured dies. Some are mixed bags. They provide a combination of investment and protection benefits. Life insurance is a psychological ploy by a life insurance company to make profits. It plays on the real fear that you have about the financial condition of your dependents in the face of the as yet purely imagined premise of your death. Yet death is a fact. And whose death will occur when, nobody knows. You may die or not die. So, a decision to take a life insurance policy is dependent entirely on you based on what you think about this exigency's unpredictable occurrence. Whether people die or not, the insurance premium and interest income thereof on every life insurance policy is utilized by the insurance company mostly to make profits. Only a small percentage is spent by it on life insurance claim payments. Regardless of anything, the life insurance company always profits.