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Archive for May, 2012

Learn More Before Purchasing Life Insurance

Friday, May 4th, 2012

In simple terms, life insurance can be defined as a contract agreement between an insurance corporation and a person. The agreement states that if an person dies, the insurance company will pay a definite amount of money to his or her family. To limit the liability of the insurance company, the contract provides specific exclusions of coverage. The most general exclusions are suicide, war, riot, fraud and civil turmoil. In other words, life insurance is a contract that is legal in nature, where the terms of the agreement stipulate the limitations of the vents insured. Before one can buy life insurance policies, it is probably best to be familiar with the different types offered in the market. There are two main categories, which are:

1. Investment policies- The main principle of these polices is to aid the growth of capital by single or continuous premiums. Common examples of these policies are variable-life, whole-life and universal-life policies.

2. Protection policies- These kinds of policies aim to offer reimbursements in the event of specific incidents, in form of lump sum recompense. A common form of a policy of this nature is term insurance

Numerous policies govern life insurance. For example, ‘whole life policies’ provide people with cover during their entire lives and not for fixed terms. Depending with the nature of the agreement, the insurance company might need the policyholder to make ongoing contributions to support the life policy. In most cases, these contributions increase as the person gets older, due to the increased chances of facing death. Usually, the manufacturers base whole life policies on investment thus future benefits will keep fluctuating depending with the economic performance.

If you are thinking of buying a life insurance policy but do not know where to begin, there is no need to despair. The most suitable way to being is by assessing as many forms of life insurance as you can manage. One of the best ways to find this information is online, where you will find sites dedicated to helping you find the most suitable policy. A good rule one should apply before making a purchase is that the policy has to be worth at least seven times your yearly income. That will ensure that the benefits will be sufficient to protect your loved ones after you are no longer in this world. A number of factors that determine the prices of these policies include: