What is general life insurance? What is a main purpose of life insurance? Where
and how you can get life insurance? General life insurance can be defined
as a contract between contractors, insured and insurer. With this contract insurer
obligates himself to pay benefits ( prearranged, beneficiary sum of a money),
upon of a death of insured individual. Insured or insurance policy holder
pays a premium in periodically rates(marked in contract) or in the whole
amount. Polices represents legal contracts and as such they have terms of
insurance represented in them.
They also have written in them limitations of
insured events and specific exclusions, common examples.
Main purpose of individual life insurance is taking care
of the family you leave behind in case of your death.
Life insurance
is part of financial plan, and every individual and their financial
adviser should include it in their planning. It helps you to be calm
and to be safe in your knowledge that your family is taken care of
in case if something happens to you. It doesn't substitute their pain, but it makes
things easier for your loved ones. It helps them to better cope with unexpected,
and to faster land on their feet after death of a family member. Policies also
have other purposes. Some or them are: providing funds to pay final expenses,
creating an inheritance for your heirs,making charitable contributions in the event of your
death, creating a source of tax-deferred savings.
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General life insurance can be divided in two categories: term life insurance and permanent
life insurance. Term life insurance covers fixed time period and is renewed after expiring
of initial contract term. It is less expensive, but it’s not covering savings. Insurance
premiums are increasing for renewal with your age.Term Insurance insurers usually sell
for one, 5,10, 15, 20 or 30 years. Permanent life insurance covers indefinite period
of time and life insurance premiums are at a fixed level for the duration of
the policies. After period of accumulating it offers tax differed saving.
Permanent life
insurance can be divided in 3 subcategories: whole life insurance, universal life insurance and
variable life insurance.
Whole life insurance is a life insurance policy that covers insured till his or hers death,
without time limitation of policy. In turn insured pays premiums, previously fixed by policy.
Whole life insurance can be divided on traditional insurance policy, interest sensitive insurance
policy and a single premium insurance policy. Universal life insurance represents flexible type of
permanent life insurance with flexible premiums within minimal and maximum rates arranged by contract.
And flexible death benefits depending on accumulated amount upon the death of insured.
You can also
use accumulated cash amount for paying premiums, collateral for loans etc. Variable life insurance
is permanent life insurance policy which flexible premiums for insured simultaneously offering investment
feature. with variable life insurance you can create separated investment accounts with different values.
In deciding which of the above given policies to get, you must take several things in consideration. What
object you are planning to achieve. Your monetary ability and pros and cons of each of the policies. Your
family needs after your death, etc.
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