Life Insurance

Life insurance is a contract between an insured (insurance policy holder) and an insurer, where the insurer promises to pay a designated beneficiary a sum of money (the “benefits”) in exchange for a premium, upon the death of the insured person.

Depending on the contract, other events such as terminal illness or critical illness may also trigger payment. The policyholder typically pays a premium, either regularly or as a lump sum. Other expenses (such as funeral expenses) are also sometimes included in the benefits.

Life policies are legal contracts, and the terms of the contract 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-based contracts tend to fall into two major categories:

• Protection policies – designed to provide a benefit in the event of specified event, typically a lump sum payment. A common form of this design is term insurance.
• Investment policies – where the main objective is to facilitate the growth of capital by regular or single premiums.

Common forms are Whole Life, Universal Life and Term Life policies.

Basically, Whole Life insurance is like owning the insurance. The rates and benefits stay the same for the contract of the policy. It is guaranteed your whole life. This is the policy we sell most and what people like to call “burial” insurance. This works well for retired people.

Term insurance is like renting insurance. The rates and benefits are guaranteed for only a term (period) of time. These plans are good for working people who are usually under the age of 60. The rates are a lot more affordable and are good to cover families that are usually trying to cover larger debt.