| Life insurance is a type of insurance wherein | | | | 2. Permanent Life Insurance. This type of |
| the insured pays a premium for a period | | | | policy provides coverage till the policy |
| (often lifetime) and the life insurance | | | | matures. A policy is said to mature when the |
| company provides insurance coverage against | | | | person reaches a fixed age or dies. The |
| the risk of death. There are many types of | | | | policyholder needs to pay premium for the |
| life insurances or assurance (in the UK) | | | | entire period. This type of policy |
| available today. | | | | accumulates a cash value. The policyholder |
| | | | can withdraw or borrow the money or surrender |
| Basics: There are 4 parties in any life | | | | the policy to receive surrender value. There |
| insurance policy. The policyholder is the one | | | | are 3 types of permanent life insurances. |
| who is buying the policy, the insured is the | | | | |
| one against whose death the policy is made, | | | | 2.1 Whole life insurance. This has a level |
| the insurer that is the insurance company and | | | | premium and corresponding cash value. Upon |
| finally the beneficiary is the person who | | | | death of the insured, the beneficiary |
| will get the proceedings of the life | | | | receives the death benefit only and not the |
| insurance policy. It is mandatory that the | | | | cash value. The policy owner can borrow loans |
| policyholder should have a legitimate reason | | | | on the cash value. |
| for insuring a persons life. | | | | |
| | | | 2.2 Universal life insurance. This has a |
| Types of Life Insurances: | | | | flexible premium and gives higher internal |
| | | | rate of return. The policy has a cash account |
| 1. Temporary Life insurance.This policy is | | | | depending upon the premium. The surrender |
| also called term life insurance that has | | | | value equals the cash account balance. |
| coverage for a fixed period of time. The | | | | |
| policyholder needs to pay a premium for a | | | | 2.3 Variable Universal life insurance. This |
| fixed period of time for which the insurance | | | | is similar to universal life insurance with |
| company provides insurance coverage. This | | | | cash account. However the money is invested |
| type of policy does not accumulate cash | | | | by the insurance company in mutual funds for |
| value. | | | | a greater return. |
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