Life Insurance at a glance
There are many kinds of insurance policies that can be purchased by people. Of these a Life Insurance policy is the one which covers a person for his or her entire life.
According to this agreement, the insurance company agrees to pay a specific sum of money after the death of the person who is being insured. In return the person who purchases life insurance plan pays a premium at regular intervals of time.
Insurance companies pay the agreed sum of money only if the death of the policy holder takes place as per the insured events that have been specified in the contract. The most commonly stated insured event in life policy contracts is serious illness.
There are different types of life insurance policies that people can opt for on the basis of their requirements. Before selecting any type of policy, all types of policies must be compared and the most feasible one must be chosen.
A term life insurance plan is also known as a temporary insurance plan. This plan is the simplest and easiest one which can be purchased for insuring the life of a person. This type of a plan is the one which covers the life of a person buying this plan only for a specific period of time. If the person for whom the insurance plan has been purchased for dies within the term of the plan, the insurance company pays the sum of money. However, if the term ends and the policy is not renewed, the cash benefits are not paid out.
Whole Life Insurance plans are the ones which cover an individual for his or her entire life. There is no fixed time interval after which the policy expires. When the policy holder dies, the insurance company pays a specific sum of money to the beneficiaries named in the policy.
The amount of premium for whole life time insurance remains the same throughout the life of a person. This is mainly because the cost of this type of insurance is spread over many years. In this type of a policy, cash gets accrued over time and is paid in a lump sum.
Universal life insurance plan is the one which covers a person till his or her death. In universal insurance plans, the insurance amount is divided into death benefit and accrued cash. In this case, cash can be withdrawn as soon as cash value gets accumulated and so cash is not paid in a lump sum.
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