Life insurance is a type of insurance where the insured pays a premium for a period (often for life) and the life insurance company provides insurance coverage against the risk of death. There are many types of insurance or life insurance (in UK) available today.
The Basics: There are 4 parts to any life insurance policy. The policyholder is the one who buys the policy, the insured is the one who issues the policy against his death, the insurer is the insurance company, and finally the beneficiary is the person who will take the action of the policy life insurance. It is essential that the policyholder has a legitimate reason to insure the person’s life.
Types of life insurance:
1. Term life insurance. This policy is also called term life insurance and covers a specific period of time. The policyholder must pay a premium for a specified period during which the insurance company provides insurance coverage. This type of policy does not accumulate monetary value.
2. Permanent life insurance. This type of policy provides coverage until the policy expires. Politics is said to mature when a person reaches a certain age or dies. The policyholder must pay the premium for the entire period. This type of policy accumulates cash value. The policyholder can withdraw, borrow or transfer the policy to receive reimbursement. There are 3 types of permanent life insurance.
2.1 Whole Life Insurance. This has a level bonus and corresponding monetary value. When the insured dies, the beneficiary only receives the death benefit, not the cash value. The document holder can take out loans with cash value.
2.2 All Risk Life Insurance. This has a flexible premium and gives a higher IRR. The policy contains a cash account based on the premium. The redemption value is equal to the cash account balance.
2.3 Comprehensive variable life insurance. This is similar to whole life insurance with a cash account. However, the money is invested by the insurer in mutual funds to obtain a higher return. Therefore, there is a greater chance that the cash account will increase, but there is also a risk that the cash account will decrease.