Life Assurance
Life assurance, also known as life insurance, is a financial product that provides protection and financial support to individuals and their families in the event of the insured person's death. It is a contract between the policyholder (the person who buys the policy) and the insurance company.
Here's how life assurance typically works:
Policyholder
The individual seeking life assurance purchases a policy from an insurance company. They are usually required to pay regular premiums (monthly or annually) to keep the policy active.
Death Benefit
In the event of the policyholder's death during the term of the policy, the insurance company pays out a predetermined amount of money called the death benefit or sum assured.
Beneficiaries
The policyholder designates one or more beneficiaries who will receive the death benefit upon their passing. Beneficiaries are usually family members or dependents who would experience financial hardship in the absence of the insured person's income.
Policy Terms
Life assurance policies can have different terms and conditions. They can be for a specific term (e.g., 10, 20, or 30 years) or for the entire lifetime of the policyholder (whole life insurance).
Premiums
Policyholders are required to pay regular premiums to keep the policy active. The premium amount is determined based on factors such as the insured person's age, health, occupation, lifestyle, and the coverage amount desired.
Policy Options
Life assurance policies can have different options, such as term life insurance, whole life insurance, universal life insurance, and variable life insurance.
Underwriting
Insurance companies typically evaluate the applicant's risk factors through underwriting before issuing a policy. This helps determine the premium rates and exclusions.
It's important to carefully review the terms and conditions of a life assurance policy before purchasing to understand its coverage, limitations, and any exclusions that may apply. Consulting with a licensed insurance professional can help you choose the right policy based on your specific needs and financial situation.