There are two major types of insurance, one is life insurance, and the second is non-life or general insurance. Life insurance is that kind of insurance where the insurer undertakes responsibility to cover all probable risks occurable in the life of the insured person in lieu of which the insured pays a premium. Life insurance dates back to ancient Rome, while modern life insurance started in England in late 17th century. However, the terms ‘insurance' and ‘ assurance ' are distinct. While the former refers to providing cover for an event that may happen in future, the latter refers to provision of cover for an event that is most likely to happen.
Functioning of Life Insurance :
There are various parties involved in a life insurance venture:
The insurer
The insured
The owner of the policy ( policyholder ). Often the owner and the insured are the
The grantee (the owner when buys a life insurance policy for someone else as the insured)
The beneficiary (the designated person who receives the policy proceeds upon the death of the insured)
Life Insurance Policy :
The policy is a legal contract specifying the terms and conditions of the risk assumed by the insurer. Most contracts have a contestability period, (usually a two-year period).
Grounds for Nullification of the Policy :
A policy of life insurance can be nullified in case:
the insured commits suicide within a specified time period for the policy date (usually two years)
the application/policy terms have been subject to misrepresentation by the owner or insured on the application
Types of Life Insurance :
Life insurance can be:
1. Temporary: This kind is characterized by a defined time period which is known when the contract is initially put into force. A Term Life Insurance comes under this category.
2. Permanent: This kind of life insurance is one which remains in force unless the policy expires or until the policy matures. Some of the types of permanent life insurance are: Whole Life, Universal Life, Limited Pay and Endowment.
Concepts Related to Life Insurance:
There are some other concepts related to life insurance. A brief discussion can be made here:
Group life insurance is term insurance policy covering a group of people, (like for instance, employees of a company)
Joint life insurance is either a temporary or permanent policy insuring two or more lives (the proceeds are payable on the first death)
Modified whole life insurance is a whole life (insurance) policy that charges smaller premiums for a specified period of time and following its expiry, the premiums increase for the remainder part of the policy.
Riders are modifications to the insurance policy added at the time when the policy is issued. They provide features desired by the policy owner to change the basic policy.
Single premium whole life insurance is the policy where only one premium is payable at the time of issuance of the policy.
Survivorship life insurance is a whole life (insurance) policy insuring two lives (the proceeds are payable on the later death).
For more information, please explore the following links:
Family Insurance
Seniors Insurance
For more information on Life Insurance, please refer to www.mapsofworld.com .
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