Life insurance is a term that refers to a contractual agreement between a policy holder and an insurance company wherein the insurance provider agrees to pay out an agreed sum to the designated beneficiaries of the policy (usually the insureds family) upon the insureds death for a predetermined regular fee.
Some countries tend to have funeral costs covered in most of their life insurance policies. In the UK however the general protocol for life insurance is to just have a lump sum paid out to the family of the deceased.
A life insurance policy will contain contract terms and these terms will include death circumstances for which the insured will not be covered, and the ones for which they will be. Death circumstances that will generally not be covered by life insurance are suicide, riot or war.
Life contracts usually come in one of two forms, either a protection policy or an investment policy. Protection policies will be fairly standard life insurance policies in that they will require a benefit to be paid to the contracts beneficiaries (usually a lump sum) in the occurrence of an event described in the contract. Investment policies however are used for the growth of capital by regular premiums (payments). Common types are variable life policies, whole life policies and universal life policies.
The beneficiary is the person(s) who will receive the payout upon the death of the insured person and can be changed at any time by the policy holder unless the beneficiary is irrevocable in which case the policy holder must have express permission from the beneficiary in order to make any changes regarding the beneficiary.
The policy holder and the insured are not necessarily the same person (although they usually are) but someone can take out a policy to cover someone else's life, for example, a wife could take out a policy on her husbands life, making her the policy holder and him the insured.
In cases where policy owner differs from the insured, insurance companies are looking to limit who can take out a policy for who's life. This is called an insurable interest requirement and it means that the person taking out the policy would suffer a genuine loss if the insured should die. This is to stop people taking out policies on people who they expect to die and aren't particularly concerned if they do or not, and so as not to increase the chances of murder being committed by someone who has taken out a policy for someone, and then intends to kill them to reap the rewards.
Life insurance, like most other types of insurance is basically an agreement between the insurance provider and the insured that for a recurring fee, the aforementioned beneficiary/beneficiaries of the policy will receive the proceeds of the contract (usually a lump sum) upon the occurrence of one of the terms of the contract, in the case of life insurance, this will usually be the insureds death.
Article Source: http://www.uberarticles.com/articles
For more information about life insurance, visit forlifeinsurancequotes.com, an information service for life insurance
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