Life insurance is a contract between a person needing insurance and the insurer, where the insurance company agrees to pay a certain amount of money upon the happening of the covered individual's or individuals' termination or other action, such as terminal disease or critical disease. In return, the policy holder agrees to pay a stipulated amount called a premium, at constant intervals or all at once. Sometimes bills and termination costs plus catering for after funeral costs should be included in the life policy Premium. In the united states, the average form simply specifies a lump sum of money to be paid out on the covered's death.
As with most insurance documents, life insurance insurance is a contract between the insurance company and the insurance buyer whereby a benefit is given to the designated beneficiaries if an insured circumstance occurs which is covered by the insurance policy. To be a life policy the policy owner condition has to be based upon the lives of the people selected in the life policy.
Insured actions that can be covered include:
Grave illness
Life policies are legal documents and the terms of the deal describe the limitations of the covered conditions. Specific exclusions are often penned into the document to limit the liability of the insurance company; as an example, claims relating to suicide, fraud, war, riot and civil commotion.
Life insurance contracts tend to fall into two major categories or life policies:
Protection policies - set up to provide a benefit in the action of specified happening, most usually a lump sum of cash payment. A common form of this type of insurance is term life assurance.
Investment documents - where the main objective is to facilitate the growth of capital by single premiums. Common forms (in the US anyway) are whole, universal life and variable documents.
