Life Insurance: A Slice of History The modern insurance contracts we have today such as life insurance, originated in 14th century merchant practice. It has also been recognized that various strains of security arrangements have been in effect since time immemorial and in their embryonic nature they are somehow similar to insurance contracts. Do you want to know about Life Insurance? Check This Out.
The phenomenal growth of life insurance from nearly nothing a hundred years ago to its current gigantic proportion is not one of the outstanding marvels of business life today. Essentially, life insurance became one of the felt necessities of the human kind due to the relentless demand for economic security, the growing need for social stability, and the clamor for protection against the hazards of cruelly crippling calamities and sudden economic shocks. Insurance is no more a monopoly for a rich man. Gone are the days when only the social elite get their protection, because insurance contracts are riddled with the assured hopes of modest means by many families in this modern era. It is woven into the very nook and cranny of national economy, as it were. It touches upon the most holy and sacred ties in man’s life. The parents love. The wives love. Children’s Love. And even business-love.
Life insurance as financial protection A life insurance policy pays out, under certain circumstances, an agreed amount generally referred to as the assured sum. The sum assured in a life insurance policy is intended to respond in case of your death or disability to your financial needs as well as to your dependents. Life insurance therefore offers financial cover or protection against those risks.Life insurance: General Concepts Insurance is a system which spreads risks. Basically, the broker or the insurance company shares the rates that all their customers pay. In theory, the pool of premiums answers for each insured’s losses.
Life insurance is a contract under which one party insures a person against loss by another’s death. A life insurance is a contract whereby the insurer (the insurance company) undertakes to pay a certain amount of money for a stipulated sum, if another dies within the policy’s time limit. The insurance money’s payout relies on the loss of life and, in its broader sense, life insurance requires accident insurance, because life is covered under either policy.The life insurance policy contract therefore lies between the policyholder (the insured) and the life insurance company (the insurer). The policy holder pays a premium in return for that protection or coverage for an agreed period of time, depending on the type of policy purchased.
It is important to note in the same way, that life insurance is a respected scheme. This means it isn’t an indemnity contract. In general, the interest of the person insured in the life of hi or another person is not subject to an exact pecuniary calculation. You can’t simply put a price tag on the life of one person. Consequently, the compensation measure is whatever is set out in the policy. Nevertheless, if it’s a case involving a borrower who insures a debtor’s life, the interest of an insured person is susceptible to exact pecuniary measure. The benefit of the insured borrower is observable in this particular scenario, because it is dependent on the indebtedness value.Common life insurance policies In general, life insurance policies are often sold for reasons other than those listed above to cater for retirement planning, savings, and investment. An annuity, for example, can very well provide earnings during your retirement years.
In life insurance policies, full life and endowment participating policies or investment related plans (ILPs) combine a savings and investment aspect with insurance coverage. Therefore the premiums would cost you more for the same amount of insurance coverage than purchasing a pure insurance product like term insurance.Everyone in a world run by money dictates wants to have financial freedom. Who isn’t? But we NEED financial security to all. Most people are losing sight of this significant aspect of financial literacy. They invest everything and risk it all in order to make more and yet they end up losing most of it, if not all-this is a fatal formula. The best way to do that is to take a portion of your money and invest in financial security, then take the rest and invest in financial freedom.