How does Life insurance work?

Life Insurance is basically a contract between the insured and the insurer wherein the latter pays a certain amount to the beneficiary of the insured if ever the insured dies.  To gain this protection, the insured will have to pay premiums to the insurer for a set number of years.

Who can I put as my beneficiary?

Basically, you can put anyone as your beneficiary.It could be your spouse, your children, or a favorite charity.

If I die, what can my beneficiary recieve?

Your beneficiary will receive the coverage amount of your policy as long as your death meets the criteria set forth in the policy when you bought it.

What are the instances that my insurance policy will become void?

Suicide is usually one instance that an insurance policy will get cancelled.

Can I get insured for some other reasons aside from death?

Yes.  You can be insured for critical illness, disability, accidental death, and long term care.

What are the two categories of life insurance?

Protection policies mainly provide a lump sum payment for a certain event like death while investment policies produce capital with regular premiums.

Is it possible that the insured and the policyholder are different people?

Usually, the insured and policyholder are one and the same but there are sometimes instances when this arrangement is possible.

Can I change beneficiaries?

Yes, just speak to your insurer to do this.  Unless your policy has an irrevocable beneficiary condition, you can change beneficiaries.

What are the two classes of Life insurance cover?

Classes of life insurance include temporary and permanent life insurance.

What are its subclasses?

The subclasses of temporary and permanent include variable, whole life, universal, endowment, term, and variable life insurance.

How do term life, permanent life, whole life, universal life, and endowment life insurance differ from each other?

Term life insurance covers a specific period of time only, with a set premium.  Permanent life insurance remains in force until it pays out or is voided.

Whole life insurance has a cash value that is loanable aside from providing protection.

Universal life insurance is similar to a permanent life insurance but has a higher return and a more flexible payment scheme. You can also draw cash from this particular insurance.

Endowment life insurance has a cash value equal to the death benefit of the life insurance policy.

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