Things You Need to Know About Life Insurance

Life insurance is one of the most important foundations in managing your personal finances. Yet most people still remain skeptical and confused on this topic. There are many details that you need to learn and understand about life insurance.

Getting educated and properly informed will help you decide if this is the best solution and protection for you and your family. Here are some vital information to help you understand what life insurance is all about.

Additional Information on Life Insurance

  • Life insurance policy – A policy is also referred to as a contract between the insurer or life insurance company and the insured also known as the policy holder. The insurer collects the premiums paid by the policy holder and pays out the claims such as death benefit, in the event of a death, to the beneficiaries. The insurer gets its profit from the premiums and claims.
  • Life insurance compensates financial loss – It helps reimburse financial loss in case of situations such as loss of life. The beneficiaries are provided with monetary assistance to cover for the expenses and lost income. In unforeseen situations such as unexpected death, life insurance provides a peace of mind. It is beneficial especially for stay-at-home spouses or bread winners.
  • Life insurance if for your beneficiaries – If you are supporting other people financially, life insurance will help support your beneficiaries through monetary claims. In case of death, your loved ones can receive financial support.
  • Life insurance is a risk management tool – There are some insurance policies that incorporate some investment. However, it functions more as a risk management tool to help you plan your finances.
  • Life insurance can cost less – There are policies with high premiums which includes all the best features an insurance company can offer. However, there are other options such as low premiums which are more suitable for some policy holders depending on their needs and eligibility.
  • Term and permanent insurance – Term life insurance is the most simple, affordable and widely used. The premium paid by the policy holders is based on the assumption that the insured will die within a particular term of 10, 20 or 30 years.

Permanent insurance, on the other hand, has the same method but with an additional investment savings. This is also referred to as a cash value. The investment includes bonds backed by the insurer, variable life which offers options such as mutual funds, and universal life insurance which is designed with flexibility but with higher risks.

  • Life insurance roles – These roles include the insurer, owner, insured and beneficiary. The insurer is referred to as the insurance company who will pay the claims in the event of a death. The owner is the policy holder who pays a premium to the insurer. The insured is the person where the policy is based on while the beneficiary is the party who will receive the insurance claims.
  • Life insurance cancellation – After reviewing and evaluating your existing life insurance policy and if you feel that the policy is not appropriate for you, you need to discuss the options with your insurance agent. There are many details that need to be considered. You need to sit down and analyze the investment value, the premium paid, policy terms and agreements.

Before finalizing your decision in getting a life insurance policy, research and get involved in the details. After all, this is a big decision that will affect you and your loved ones.

Getting Familiar with Insurance Policy Claims

An integral part of all insurance services include the insurance claim. It refers to a formal request directed to the insurance company where the claimant seeks payment for the insurance policy. The request is reviewed for legitimacy as well as the claimants’ eligibility in receiving the payment. Once everything is validated, the insurance company pays the insured party.

The insurance claims cover several benefits such as death benefits from life insurance policies. Some policies also include health exams and procedures. In most cases, a third party claims the benefits on behalf of the person insured. However, the policy holder or benefactors written in the policy can claim the insurance payout.

The insurance claim protects the policy holder from financial loss. The insurance services provide contracts between the insurer and insured party. These contracts include medical costs and expenses, physical damages and liabilities, and death.

Health Insurance

Medical procedures are quite expensive. With this in mind, health services have created policies to help protect and aid patients from getting buried in financial expenses and problems especially in the event of an accident or a medical illness.

Property Insurance

Your home is one of the most important assets of an individual. When filing for a property claim, an assessment is conducted to check the damages reported. Once the analysis is cleared and approved, the insurance company will then provide reimbursement to the policy holder for the damaged property.

Life Insurance

Life insurance claims are required to present a death certificate. In situations where the claim involves large sums of money, an in-depth assessment may be required to guarantee that the cause of death is covered by the insurance policy. The insurance contract does not cover suicide or death from a criminal act.

Insurance Payouts

Most insurance services grant the claim after a processing period from one to two months. Although there is no particular period, insurance companies usually pay the insured or the beneficiary without deferral to avoid additional charges and interests in delay.

There are some scenarios where there is a delay in the payouts. For example, if the policy holder dies within two years from the date of the policy issued, the beneficiary may have to wait for six months to a year due to the two-year contestability. Most contracts include this clause to ensure that no fraud has been committed.

This is the same with suicide and homicide cases. In homicide cases, an investigation will be conducted to assure that the beneficiary is ruled out as a suspect.

For the longest time, the insurance payout is provided in lump-sums. However, in recent years, some insurance companies have installment or annuity payment schemes. Some policy holders prefer installment payouts to assure that they receive a certain amount over a period of time.

Usually, life insurance policies pay upon the death of the insured but now some companies allow the insured to withdraw part of the face amount in case of a terminal or critical illness. This practically allows the policy holders to become the beneficiaries of their own policies.

Insurance policies provide the insured and their loved one’s assurance from facing financial difficulties. This will protect you from further stress financial loss.