Facts About Life Insurance
Life insurance can be defined as a financial agreement, written between an insurer and an insurance holder or insurer, under which the insurer promises to cover a designated insured person a predetermined amount of money upon the death of that insured person, for an agreed term. Usually, a life insurance agreement takes the form of a promissory note, which promises that payment will be made on a given date in return for which the insurer agrees to pay regular premiums at specified intervals over the agreed term. The amount of coverage provided is also specified in the agreement. Typically, a full coverage life insurance plan covers the named beneficiaries, plus any dependent children who would receive the benefit under the terms of the life insurance policy. For more information about life insurance, one can contact leading insurers dealing in life insurance products. Learn more about agent.
Life insurance generally provides protection for family members or other specified individuals upon the insured party’s death. Depending on the plan and policy, the beneficiaries may be compensated for medical and funeral expenses upon the insured party’s death. In most cases, life insurance also ensures that the named beneficiaries receive an amount upon the insured party’s death equal to the value of the policy, less any premiums paid by the insured. In certain cases, life insurance allows the insured party to choose to have cash payments made to specified beneficiaries or other designated persons in lieu of periodic payments.
As per usual, the insured party pays a premium to the life insurance company. At the time of death, the company transfers this amount to an account where it is held by an asset manager. Once the specified payout amounts are made, the asset manager distributes the remaining amount among the named beneficiaries according to the terms of the policy, and upon the insured party’s death, the company makes a further payment to the trustee of the beneficiary, called the Life Trust Fund, who in turn, disburses the remaining amount to the named beneficiaries. In some states, the term Life Insurance Company refers to any entity that purchases life insurance, but may include any of the following: a bank, a broker, or a brokerage firm. However, in general, Life Insurance refers to any financial or insurance institution that provides life insurance coverage.