Know More About Life Insurance
What is Life Insurance?
In simplest words, life insurance is an agreement between you and an insurer where the insurer promises you to give the financial support to your family when you die. According to the agreement, you are liable to pay certain amounts on monthly or yearly basis for which the insurer promises to pay a certain sum to a person you choose (your beneficiary upon your death). Other than this basic benefit, life insurance can also help your family in paying any debts such as mortgages, car loans and credit card debts after your death. Small investment in life insurance surely helps your family to survive better in future, after your die. However, before opting for a life insurance plan, you need to understand the entire procedure of life insurance so that you can sit back comfortably. Let us learn some important aspects of life insurance to ensure a safe and secure investment.
What lies in Life Insurance Contract?
A life insurance contract comprises of three basic things: legal provisions, application and policy specifications. Legal provision would inform you about all the legal activities associated with the life insurance plan that you have chosen for you. The application form usually contains the information about you and your medical declarations. A policy specification would usually have information, benefits and conditions for the type of life insurance that you have taken.
Legal provisions elaborate the rights, conditions and obligations of the parties to the contract. The policy specifications describe the amount to be paid (premium) by you and the amount to be paid to your family upon your death. Besides these, it may also include any riders and options added to the standard policy. Some riders allow you the flexibility of skipping your premium payments during the periods of disability, and raising the amount of insurance without a further medical exam and accidental benefits.
Choosing your beneficiaries?
Beneficiaries is a person (or people) chosen by you who is liable to get the coverage amount after your death. While buying a life insurance plan, you need to give name (or names) of person (or people) who will receive the proceeds of your insurance policy. Beneficiaries can be anyone from your family, corporation or other legal entity. In case you choose multiple beneficiaries, you need to assign definite percentage of the net death benefit to each. Care must be taken in case if you choose your minor child as a beneficiary. In such case, it is advised to designate an adult as the child's guardian in your will.
If you feel to make changes in the list of beneficiaries, you can do so at any point of time. To do this, you will just need to sign a new designation form and send it to the insurance company. However, if you named someone as an irrevocable (permanent) beneficiary, you need to take permission from that person to make the necessary amendments.
Where can you buy Life Insurance?
Life insurance can be obtained from your employer through a group life insurance plan offered by your employer. It can also be purchased through an association to which you belong (which may also offer group life insurance). You can also contact a life insurance agent or broker to get the life insurance plan from the respective company or you can directly approach the insurance company.
No matter by which means you opt for the life insurance plan but make sure that you have had a good research about the type of insurance, reputation of company and offered benefits of the plan.
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