Cover Your Life

Life insurance is an indenture between an insurer and a policy payer in which the insurer agrees to compensate the policy payer's beneficiary or beneficiaries in the event of his death. One provision of this contract is that the policy payer pays an insurance premium to fund his assurance. This is paid either in regular intervals or lump sums. The coverage of one's life insurance depends on life insurance policies. Beneficiaries are paid when demise is covered by life policy. Covered events are based on the lives of those who are included in the life policy. Examples of insured events are deaths, accidents, sickness, and untimely deaths.

Life insurance contracts normally have limitations for both insurer and policy payer. Exclusions are written in the contract to delimit the liability of the insurer to the policy owner.

Life-based contracts fall in two classifications: protection and investment. An example of protection policies is term life insurance, in which a specified event is covered by insurance. Hence, the occurrence of the mentioned event will indemnify the policy owner. Investment policies include whole life insurance, in which the primary intention is to aid the increase of capital through payment of premiums.

Individuals that concern insurance include: insurer, policy owner, insured, and beneficiaries. The insurer is the party that pays beneficiaries of the insured in the event of his death or demise. There is a difference between the insured and the policy owner although they are one person most of the time. The policy owner is the purchaser and payer of the insurance while the insured is the cover of the insurance purchased by the policy payer. A wife may be the policy owner and her husband may be the insured. In this case, the wife purchased the insurance for her husband and promises to pay the premium. The husband, on the other hand, is the cover of the insurance. In the occasion of his death, his beneficiaries would be paid a benefit by the insurer. Beneficiaries are the recipients of insurance proceeds. They may either be individuals, organizations or business entities.

The cost of a life insurance is based on the insurer's calculations of policy prices with the purpose of funding returns to be paid, covering administrative costs, and making a profit. Price is based on the mortality tables computed by actuaries. Actuaries calculate mortality tables with the use of actuarial science which is based on probability and statistics. Expectancy estimates on life, which are essential in taxation regulation, can be taken from mortality conjecture.

In the occurrence of the insured's death, life insurance proceeds can be claimed upon presentation of proof of death. Insurers normally require death certificates and insurer's claim before they pay benefit to beneficiaries. Insurance companies also reserve the right to investigate a suspicious death of an insured person to determine whether they are obliged to pay the claim.