which is a contract between the owner of the insurance policy and the insurance company or insurer, in which the insurance company agrees to pay a sum of money (benefit) on the death of the insured person in exchange for insurance premiums that the insured person regularly pays to the insurance company or as a single lump-sum payment. Depending on the type of insurance contract, the insurance may cover other cases, such as terminal illness or critical illness, because the insurance company pays a specific benefit to the insured. Life insurance covers other expenses such as funeral expenses. The insurance policy is an official document and its provisions specify the accident restrictions covered by the insurance. Specific exceptions are often written into the contract so that the insurance company declines all responsibility in this regard. Examples of such exceptions are allegations of suicide, fraud, war, riots, and civil disturbances. Modern life insurance is similar to the asset management industry, with companies diversifying their offerings by adding pension insurance such as annuities.
The parties to the contract
The policyholder is the person responsible for making payments on a policy, while the insured is the person whose death results in the payment of death benefits.The proprietor and the safeguarded might be a similar individual. For example, if Joe buys a life insurance policy, he is the owner and the insured. But if his wife buys a life insurance policy, she is the owner and he is the insured. The owner of the policy is the guarantor and is the person who pays for the policy. The insured is a member of the policy, but not necessarily a party to it. The beneficiary receives the proceeds of the policy on the death of the insured person. The owner chooses the person who benefits but is not a party to the policy. The owner can change the beneficiary person if it is not in the policy, as long as the name of the beneficiary is not changed. In the absence of this condition, any changes to the beneficiary’s name, allocations in the policy, or borrowing of the cash value may be made, but the approval of the original beneficiary is required. In cases where the policyholder is not the insured person; Insurance companies are seeking to restrict the purchase of insurance policies for insurance players. Concerning a life insurance policy, close family members and business partners generally have an interest in the insurance. An insurance interest clause means that the purchaser will bear some sort of loss in the event of the death of the insured person. This condition prevents people from profiting from the purchase of purely speculative policies on people awaiting their death. When the condition of insurance interest is not present; the risk to the insurance proceeds of killing the insured buyer will be considerable.
The terms of the contract
Special exceptions may apply, such as suicide clauses, where the policy becomes null and void if the insured commits suicide within a specified period (usually two years from the date of purchase; some states have a legal provision for suicide for one year). Any misrepresentation by the insured on the application may also result in the revocation of the policy. Most U.S. states specify a maximum competition period, often no more than two years. Only if the insured dies within this period does the insurer have the legal right to contest the misrepresentation lawsuit and request additional information before deciding to pay or reject the claim. The face amount of the policy is the initial amount that will be paid on the death of the insured or at the maturity of the policy, although the actual death benefit may be more or less than the face amount. The policy becomes payable, for example, when the insured dies or reaches a specified age of 100.
There are two types of life insurance
1-Life insurance only, and this type of contract includes that the insurance company pays a certain amount of money to the heirs or beneficiaries registered in the contract in the event of the death of the policyholder during the period of validity of the contract, (the interest of the policy is to ensure the heirs for a fixed period, obtaining the agreed amount in the event of the death of the insured (“head of the family”), to provide for the needs of the family and to continue to live in solace, solidness and a good life after the passing of the provider (“top of the family”)
2- Acontract that includes life insurance and savings: According to this contract, the insurance company pays the contracted amount to the heirs or beneficiaries in case of death of the policyholder, or pays the policyholder another contractual amount in case of reaching the age of 65 years, for example, which is part of his pension.
Due to the difference between the two types of insurance taken out, the monthly premium/monthly subscription that the policyholder pays to the insurance company according to the first type is much lower than the premium he would pay if he were to conclude a contract of the second type including savings. The monthly subscription/monthly payment can be increased by adding one of the additional protection contracts such as (accidents and amputations, serious illness, total and permanent disability) which entail additional obligations and costs.
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