teagardenmelrose.com

The fundamentals of Life Insurance

June 16, 2008

Life Insurance is defined as a contract between an insurer and the policy owner. In this contract, the insurer gives the consent to pay an amount upon the insured individual’s death or any other event like severe or terminal illness. In return, the policy holder has to pay a fixed amount, which is called premium within a specified period of time.

There are two types of life insurance policies - permanent and temporary. The Term Life Insurance or temporary life insurance policy provides coverage for a particular period. The premium paid in this case is also specified. The three main factors that should be considered in this policy are coverage term, premium and the face amount.

On the other hand, the permanent life insurance remains in effect till the maturity of the policy or the policy holder fails to pay the particular premium. Endowment, universal life and whole life are three types of permanent life insurance.

Entry Filed under: finance. .