As far as life insurance is concerned, it is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money in exchange for a premium, upon the death of an insured person. Onthe basis of this contract, other events such as terminal illness or critical illness can also trigger payment. A policy holder typically pays a premium, either regularly or as one lump sum. Expenses such as funeral expenses must also be included in the benefits. Have a look at insurancefrisco, if you need to know more about life insurance.
Life policies are considered as legal contract. It consists of terms that describe the limitations of the insured events. Specific exclusions are often written into the contract to limit the liability of the insurer; common examples are claims relating to suicide, fraud, war, riot, and civil commotion.
Life insurance is basically of two major categories:
1) Protection policies –It is designed to provide a benefit, typically a lump sum payment, in the event of specified event. A common form of a protection policy design is term insurance.
2) Investment policies –It is a type of policy where the main objective is to facilitate the growth of capital by regular or single premiums. Common forms (in the U.S.) are whole life, universal life, and variable life policies.
Life insurance is all about the ability of lowering the risk of financial burden. This can be in the form of simple cash or taxes via estate planning.