What is life insurance? And why it is necessary

What is life insurance? And why it is necessary

LIFE INSURANCE (or life assured, especially the Commonwealth of Nations) is an insurance policyholder and contract between an insurer or assured, where the insurer pledges to pay a nominal beneficiary a sum of money in exchange for premiums. , In the death of an insured (often the policy holder). Depending on the contract, other events such as terminal illness or serious illness may also pay. The policy holder usually provides the premium, regular or simultaneous units. Other costs, such as funeral expenses, can also be included in the benefits.

The legal terms of the life policy and the terms of the contract describe the limitation of insurance incidents. Certain exceptions are often written to the contract to limit the liability of the insurance provider; Common examples include claims related to suicide, fraud, war, rioting, and civilian criticism.

Modern Life Insurance is consistent with the wealth management industry and life insurers diversify their products annually to retired products.
Life-based contracts tend to fall into two main categories:

Protection policies: Designed to provide a facility for a specific event, usually a single payment A common form- A more general safety policy design in previous years is the term insurance.
Investment Policy: The main objective of these policies is to facilitate capital growth by regular or single premium. Full-life, universal life, and variable life policy in the general form (in the US).

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What is life insurance? And why it is necessary

What is the primary form of Life Insurance in ancient Rome; Members of the "Cemetery Club" cover the funeral expenses and financially helpful survival expenses. The first organization to provide LIFE insurance at a later time was the Emilic Society for the permanent confirmation office, which was founded in 1706 by William Talbot and Sir Thomas Allen in London. Each member gives an annualized share of one to three shares, considering the age of twelve to fifty members. At the end of the year, "balanced contribution" was divided between the wife and children of the dead person's members according to the number of shares of the heirs of the heirs. Start with members of the Amicable Society 2000.

The first life table was written by Edmund Halley in 1693, but it was only 1750 in mathematical and statistical tools needed to develop modern life. James Dodson, a mathematician and acquisitive, tried to establish a new company to stop the risks of long-term life-threatening policies, even after being admitted to the Amicable Life Assurance Society due to his age. He failed in trying to collect a charter from the government.

His disciple, Edward Rove Morse, was able to establish the Society for Equitable Assurances for the purpose of living and living in 1762. It was the world's first mutual insurance provider and based on the mortality rate, it laid the basis of age-based premiums on "the basis of the scientific insurance practice and development framework" and "the foundation of modern life assurance that all life-saving schemes were later based".

Morse also gave the name of the chief official aquarium - the most familiar reference to the position as a business concern. The first modern acquisition was William Morgan, who worked from 1775 to 1830. In 1776, the Society executed the first executive assessment of liabilities and later distributed its first reactionary bonus (1781) and intermediate bonus (1809) among its members. It uses regular valuation to maintain the balance of competitive interest. The society wanted to treat its members equally and the managers tried to ensure that the policyholders got the fair return in their investments. Premiums are regulated according to age, and no one can be admitted despite their health and other circumstances.

In the US in the year 1760, LIFE INSURANCE sales started. In 1759, the Presbyterian Sinad of Philadelphia and New York City created children's relief organizations of poor and distressed widows and presbyterian ministers; In 1769 the Episcopal priests formed the same fund. Between 1787 and 1837, more than two dozen LIFE insurers started,

But fewer than half were alive. In the 1870s, military officials gathered both the army inspired by the widow and the widow and widow's widow (AAFMAA) and Navy Mishuk Ad Association (Navy Mutual) in West Bengal after the Battle of Little Big Horn. The seafarers of America's sea ocean death!

Contract team

The person responsible for paying for a policy is the policy owner, but the insured person will pay the death benefit. Owner and insurance may or may be the same person. For example, if Joe has bought a policy of her own life, then she is both owner and insured. But if Jane, his wife Joe bought a policy on the life, but he is the owner and he is insured. The policy owner is guaranteed and he will be the person for the policy. The insured is a participant in the contract, but this is not a party for it.


The beneficiary gets the policy income on the death of the insured person. Owners are nominated, but not a group of beneficiaries. If the policy is not an unnecessary beneficiary name, then the owner can change the beneficiary. If there is unnecessary beneficiary in any policy, then a beneficiary change, a policy allocation, or the original recipient of the cash value section will be required.

In case of policy owner insurer (not referred to as a sewing wooco or CQV), insurance companies want to limit policy purchases with insurable interest in securities. For Life Insurance policies, close family members and business partners are usually found to have an insurable interest. Insurable interest needs to be seen, usually due to Sukki's death, the buyer faces some losses. Such requirements prevent people from benefiting from purchasing completely conceived principles on the prospect of their death. With the need for an insurable interest, a buyer's insurance returns will be more risky for a CQV. In at least one case, a insurance company is responsible for the crime of selling a product (which later threatens to kill Suequi for money), without any inferior interest, to the extent of being convicted (Liberty National Life v. Waldon, 267ALA 171 (1957)).

Terms of Agreement

Special exceptions may apply, such as a suicidal clause, by which the insured person commits suicide within a specific time (usually two years after the date of purchase, some states provide a statutory one year suicides) the policy is canceled and canceled. Any wrong representation of the applicant's applicant may also be based on cancellation. Most United States specifies maximum time of competition, not more than two years. If only the insured person dies during this period, additional information will be requested before the insurance provider demands to challenge the claims based on false reporting and to specify or deny the claim.

The face of the policy is the primary meaning which will provide the capital at the time of the insured's death or when the policy is met, although the actual death benefit can provide more or less than the face amount. The policy is met when the insured person dies or at a certain age (say 100 years old).

Costs, insurance, and underwriting

Insurance companies calculate substantial policy rates (premiums) for funding claims, covers administrative costs and provides profits. Insurance costs are determined using death tables calculated by actuaries. The table of statistics on the death table shows the expected annual mortality rate of people of different ages. Simply tell, people are more likely to die as soon as they are older and death tables enable insurance companies to calculate risks and increase premiums with age accordingly. Such assumptions may be important in taxation control.

In the 1980s and 1990s, the SOA 1975-80 Basic Select and Ultimate Tables were a common reference point, when the 2001 VBT and 2001 CSO tables were recently published. As well as basic parameters of age and gender, the new table includes smokers and separate mortality tables for non-smokers, and the CSO table includes separate tables for the preferred classes.

The death table provides a baseline for insurance costs, but the individual applicant's health and family history is also considered (except for the case of Group Policy). This investigation and outcome assessment is called underwriting. The question of health and lifestyle is asked, with specific feedback perhaps more meriting the investigation. The specific reasons that may be 

  • considered by underwear include:
  • Private medical history
  • Family History History
  • Driving record
Height and weight matrix, otherwise known as BMI (Physical Mass Index)
Depending on the above and additional factors, applicants will be placed in one of the different categories of health ratings, which will determine the premium paid for the specified carrier.

In the US, life insurance companies support the Medical Information Bureau (MIB), which has been clearing house information on applicants for LIFE insurers with participating agencies in the last seven years. As part of the application, the insurance provider often requires the approval of the applicant to receive information from their doctors

Automated Life Underwriting is a technology solution designed to perform all screening functions traditionally done by the underlators and thus seeks to reduce the time, effort and / or data required for underwriting the LIFE insurance application. [19] This system allows a point of sale point and can be time-framed for issuing issues from hours or minutes to weeks or even months depending on the amount of insurance purchased.

The death of underrated people increases faster than the general population. At the end of 10 years, the mortality rate of non-smoking male is 0.66 / 1000 / year, 25 years old. As a result, a group of 1,255-year-old men with a $ 100,000 policy, all life expectancy, a LIFE insurer will have to collect approximately 50 dollars a year to meet some of the expected demands from each participant. (Expected deaths of 0.35 to 0.66 per year × $ 100,000 per death = $ 35 per policy.) Other premiums such as administrative and sales expenses, need to be considered when setting premiums. For a $ 100,000 policy in the competitive US Life Insurance market, a 25-year-old smoker may offer up to 90 dollars a year for the history of choice of treatment.

Most of the revenues received by the insurance company are premium, but the returns from premium investment constitute an important source of profit for most LIFE insurers. Group insurance policy is an exception to this.

In the US, LIFE insurers do not need to legally provide coverage for everyone, excluding the requirements of the Civil Rights Act compliance requirements. Insurance companies only determine the insurability and some people are considered unsupported. The policy can be denied or rated (raising the premium amount to compensate for high risk), and the premium amount will be proportional to the value of the policy.

Many companies separate applicants in four general categories. These categories prefer the most preferred, preferred, standard and tobacco. The best of choice is reserved for the healthier people of the general population only. This may mean that the proposed insured person does not have any unfavorable medical history, is not under the medicine and there is no family history of cancer, diabetes, or other condition. The proposed insurance is currently under the control of medicines, and the meaning of a special illness has a family history. Most people are in the quality division.

In tobacco department, people are usually given higher premium due to high rates. In the recent US death-rate table, it has been predicted that in the first year of policy, 0.35% of non-smokers men aged 25 years will die. The mortality rate is almost twice as much for every additional ten years, so at the age of 65, non-smokers have a mortality rates of around 1000 people in the first year. Compared to the rate of the male population of the US population, 1.3 per 1,000 persons per 1,000 and the age of 65 at 19.3 (excluding health or smoking conditions).

Death income

After the death of the insured, the insurance provider needs acceptable evidence of death before claim claims. If the insured's death is suspicious and the amount of policy is large, then before the determination of whether the insurer is responsible for the claim, he can investigate the circumstances surrounding death.

The policy can be paid for one hour or an annuity, which is paid for a fixed term or for a lifetime of profits in regular installments.

Assurance versus insurance

Certain uses of "insurance" and "assurance" are sometimes confused. In general, "insurance" provides coverage for an event that can happen (fire, theft, flood, etc.) in both conditions, "assurance" ensures coverage for any event. In the United States, both types of coverage are called "insurance" because of the company's simplicity of selling both products. [Quote Required] By some definition "insurance" defines a coverage which is based on actual losses but "assurance" coverage with the default benefit irrespective of damaged damage.

Life Insurance can be divided into two basic classes: Temporary and lasting; Or the following subclasses: words, universal, whole life, and last life insurance.

Term insurance
Main article: Term life insurance

Term assurance provides lifetime coverage coverage for a specified term. Policy does not accrue cash values. Term insurance is less expensive than equivalent policy, but higher than age. Policy holders can save an extended term premium or insurance needs (to pay off debt or save for survival needs).

Mortgage LIFE Insurance provides a loan insurance secured by a real property and typically represents a level premium amount for the price of a falling policy price, because it is how mortgage is mortgaged, the principal and interest of the mortgages that are continuously reduced by paying off the mortgage. The face value of the policy is always the amount of capital and interest payable, which must be filed before paying the final installment.

Group Life Insurance

Group Life Insurance (also known as Holes Life Insurance or Institutional Life Insurance) is term insurance, which usually covers a company's employee, union or organization member, or member of pension or supervision fund. His underwriting is not generally considered to be a personal proof of the remnant. Rather, considering under-type group size, turnover and financial strength. The agreement will try to exclude the possibility of reverse election provision. Group Life Insurance groups allow the group to surrender their coverage by purchasing separate coverage. The underwriting person takes place instead of the whole team.

Permanent Life Insurance

Permanent life insurance is LIFE insurability that covers the life of the insured person. A permanent insurance policy accumulates a cash value up to its cash value. The owner can access cash prize money by withdrawing money, lending cash, or surrendering the policy and accepting surrender value.

Permanent insurance is the three basic types of whole life, public life, and finishing.

Whole Life Insurance Articles: Whole Life Insurance
Whole Life Insurance provides lifetime coverage for a set amount of premium (see the main article for a complete description of many variations and options).

Universal Life Coverage

Universal Life Insurance (mentioned above) is a relatively new insurance product, in order to combine permanent insurance coverage with greater flexibility in premium payments, with the possibility of greater increases in cash pricing. There are various types of public life insurance policies, including interest-sensitive (also known as "traditional permanent universal life insurance"), variable universal life (VL), guaranteed death benefit, and equity-linked universal life insurance with it.

The Universal Life Insurance Policy has cash values. Granted premium increases their cash value; Administrative and other costs reduce their cash value.

Universal Life Insurance refers to the perceived difficulties of whole life - that is, premium and death benefits are specified. Universal life, both premium and death benefits are flexible. Guaranteed-Death-Benefits Apart from the universal life policy exception, universal life policies will stop their greater flexibility for fewer guarantees.

"Flexible death benefit" means the policy owner can reduce the death benefit. Death benefit can be extended by the policy owner, usually requiring new underwriting. Another feature of flexible death benefit is the ability to choose alternative A or alternative B death benefits and to change the living options of insured person. The option is often referred to as "level of death benefit"; Death benefit is stable for the life of the insured and the premiums are low with option B death benefits, which provide the cash value of the policy - i.e. a face amount and earn / interest. If the cash price increases over time, the death benefit is also very high. If the cash price decreases, then the benefit of death also decreases. Option B policies generally show higher premiums than the options policy.

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