Term Life Insurance Policy

Life insurance has been deemed by many to be unnecessarily expensive; some people do not see reasons why they should enter into a legal contract with any company paying a determined sum of money just because of consequences that are to some extent unforeseeable. But is it actually unnecessary or just a waste of financial resources in the real sense? These are questions that would most certainly be answered at the end of this piece.
Features

Term Life Insurance Policy

There are different types of life insurance but the focus is on Term life insurance. It is an affordable life insurance that is very flexible, convertible and easily renewable. It is for a short period of time, the most common type of life insurance and also assures financial protection that is very affordable relatively to other types of life insurance on the unfortunate event of the death of the person whose life is insured or some times in the cases of terminal illness of the insured person. The person who takes out the policy is called the policy holder or policy owner while the person on whose death financial protection is offered is the life assured. A particular pre-determined or agreed sum is paid by the policy owner or holder on an agreed consistent basis most times, annually or every 5, 10, 15 years and this is called the Life term insurance premium.
The major reason why people stick out their neck for this is because, on the death of the person’s life assured, a lump sum of money is paid out to the people that are financially dependent on the policy owner/holder, this person is referred to as the beneficiary and the policy owner would determine who would be his beneficiary on the event of his/her death. Sometimes it might be the policy owner’s estate or someone he was indebted to before his death. This holds for a situation where the policy owner is taking out the policy on his own life. There are also other circumstances where the policy holder takes out the policy on another individual; in this case he becomes the beneficiary on the death of the person insured.It is necessary to understand the differences between the insured, beneficiary and policy holder. The policy holder pays the insurance premium which is the initial financial obligation the holder must for him to be entitled to the insurance benefits, Life term insurance premiums varies between different insurance policy providers and the policy holder would choose the amount of money to insure and over what period it would cover. Two people could apply for a joint life term insurance policy and in this case, the two individuals mostly couples would be the policy holders and would both file the policy application, when one of them dies, the survivor becomes the beneficiary.
Another major feature of a Term life insurance is that the policy holder can only make a claim once, after the death benefit is paid, that ends the policy. Also it is important to add that it is initially affordable as the insurance premium paid by the policy holder is cheap initially then with time as the insured individual lives for more years, the premium to be paid increases, this differs from the whole life insurance that doesn’t increases with time- the premium is constant and usually doesn’t fluctuate.
The policy holder interested in the Term life insurance would fill an application either online or visit an insurance broker or agent and by applying for a term life insurance, you are agreeing to enter into a legally binding contract with the insurance company. The Insurance Company in determining how insurable the prospective insurance policy holder is would ask for a series of physical and medical tests to be carried out; this determines the amount of premium to be charged using mortality tables based on the individual’s use of tobacco, age and gender.
In conclusion, it is very important to note that an insurance policy is a legally binding contract and only the policy owner/holder and the insurer are the legal parties to the terms of the contract. The terms of the contract would determine to what extent the insurer is liable to the policy holder especially in the event of a claim.