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Life Insurance

Life Insurance is when an insurance company and an individual agree and make a contract in that the insurance company pays a beneficiary a certain amount of money in the event of death or terminal illness. In return the insured individual agrees and is obligated to pay the insurer a certain amount of money monthly or as per agreed time. The amount of money to be paid by the policy is calculated as to what benefits the holder will get when a claim is made.

Just like most insurance policies, life insurance is that contract made between the a policy holder and an insurance company in which in the event that insured events covered by the policy occur, benefits will be paid out to the beneficiaries.

A policyholders value is taken from his or her “peace of mind” rather than from the claim event. This because of the antithetical adverse of financial costs caused by the death of a life assurance policyholder. The insured event should be based on the lives of the people in the policy for it to be a life policy.

Insured events which may be covered are terminal or serious illness. Life insurance policies are agreed contracts and the terms and conditions of the contract have limitations on insured events. There are written down exclusions in the contract which limit or govern the liability of insured events. Examples of these events include war, suicide, civil unrest, fraud and riots.

There are mainly two categories and these are protection and Investment policies

* Protection policies are made to provide certain benefits in the events of specific events taking place, characteristically a mass payment. A usual form of this set up is term insurance.
* Investment policies are made in such a way that their main role is to enable the growth of resources through single or regular premiums. Usual forms of this are whole life, universal and variable policies.

Insurance companies calculate policy prices with the intention of funding claims, paying for administrative costs and making a profit. Actuaries calculate the cost of insurance using mortality tables.


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