What is life insurance

Most of the people who are married or who have dependants may be horrified by the thought of their premature death, leaving their families with heavy bills to pay, an outstanding mortgage to fight for answer, or a sudden drop in their standard of living. Life insurance - which guarantees a lump agreed upon death of the owner of the police - is designed to take the sting of just these concerns.
You will probably noticed this kind of insurance described as life insurance or life insurance and you may have wondered why. The reason for the distinction, which today is often blurred - stems from the fact that insurance is the risk of something happening. Death, however, is the certainty that each of us can count on as a password at a given time. Therefore, life description, was invented for the contract under which a life insurance company has agreed to pay a sum insured death of the holder of the police.
To add a little more confusion to the image, most of this type of products sold today takes the form of life insurance term. With term life coverage is extended for a predetermined years number and if the policy holder dies within that time, the lump sum insured is paid. If the policy holder survives the term agreed, however, then no advantage to them is paid. It could be argued that this arrangement is in fact of life, given that the risk is taken or the policy holder will die in the expression of the policy. Therefore, purists might argue that the "life" label should be reserved for the something called a whole-of-life insurance which pays a lump sum payment to the beneficiaries of the policyholder at any time the death occurs.
Suffice it to say that terms assurance and insurance are, in the use current, virtually interchangeable. As noted, whole-of-life insurance will pay almost always, so premiums tend to be slightly higher than the standard term life insurance. The whole of life cover is also usually packaged with an investment plan, designed to improve the final payment, and this also increases the price of premiums.
Standard term life insurance, however, remains remarkably cheap. Indeed, it is one of the few products in a market that is really price during the last decade. The level of benefits payable under a term life insurance policy are directly proportional to the level of contributions, there is much choice of what protection is purchased. It is also in a number of different types, based on a variety of personal circumstances.
The most popular variation is level term life insurance. It is known as level term because the lump sum benefit guaranteed remains the same for the duration of the insured. Decreasing term, on the other hand and just as its name suggests, offers a decreasing death benefit within the term. With a sum constant decrease risk, life insurance company may charge a premium even lower, which in fact the ideal choice for a person who wishes to ensure that a standard repayment mortgage (which the balance is also steadily declined) is fully reimbursed in the event of their death. For those who want to build to a certain extent to benefit more and more, there are increasing term life insurance (with the lump increasing by predetermined annual increments) or life insurance linked to the term index (where the benefits increase inflation).