By Imma Sila
Life insurance is also referred to as life assurance. It is a contract between an insured and an insurer where the insurer promises to pay a designated beneficiary a sum amount of money upon the death of the insured person. In some cases, the contract may have some clauses that would result to the insured being given the money before his death.
These events may include situations where one has been diagnosed with a terminal illness or critical illness. The policy involves regular payment of premium, and in some contracts, funeral expenses may be included in the contact. The policy can be a short-term contract (as short as one year) or as long as a lifetime. It is important to note that this life policy is a legal contract and the contract s has specific exclusions, which are often written in the contact to limit the liability of the insurer. Common examples are claims relating to suicide, fraud, riot and civil commotion. Life insurance fall under two major categories.
1. Protection policy, which is designed to provide a benefit in the event of a specified event typically a lump sum of money e.g. term insurance.
2. Investment policy, where the main objective is to facilitate the growth of capital by regular or single premiums. Common forms for example are whole life and universal life policies.
There are various parties to the life insurance; a policyholder who holds all policy ownership rights, insured who in some cases may be the owner who must consent to the policy, beneficiary the person who receives the proceeds of the insured.
Difference between insured person and policyholder
There is a difference between an insured person and a policyholder. In the insurance, although they are considered to be the same person, it is not always the case. For example, I may decide to buy an insurance cover for my son. In this case I am the owner of the cover while he is the insured.The guarantor is the policy owner but the son is a participant in the contract, and not necessarily involved.
A beneficiary is someone who receives proceeds upon the death of the insured. The policy owner can change the beneficiary unless the policy has an irrevocable. In cases where the policy owner is not insured (known as celli qui vat or cave), the insurance has sought to limit policy purchases to those with insured interest in the cqv. For such life policies, close family members will be found to have an insurable interest.The insurable interest requirement usually demonstrates that the purchaser will actually lose if the cave dies. Such a requirement prevents people from benefiting from the purchase of speculative policies on people they expect to die
In conclusion, insurance also has some terms. Some exclusions apply to life insurance, for example, many insurance policies provides a suicide clauses whereby if the insured commits suicide, the policy becomes null and void, any misrepresentation on the application for the insurance may also cause an insurance policy to be considered null and void.
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