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When a person takes out life insurance, he or she decides the amount or the face value of the insurance policy and its term. The insured person promises to pay a pre-decided amount of money called the premium to the insurer at regular intervals.
Life insurance can be taken against illness, accident or death. If an insured person has an accident the insurance company has to pay the stipulated amount. If he has contracted any long term illness also, the insurer has to pay the amount. If he dies within the stipulated period, his beneficiaries get the life insurance sum. The insured person names his nominee when he buys the life insurance policy. The nominee can be a family member or even a friend or an acquaintance.
The life insurance premiums have to be paid regularly. The amount depends on various factors, such as age. The older the insured person, the higher his life insurance premiums.
Generally the insured person and the policy owner are one and the same. However, in some cases a husband may buy a policy for his wife. In which case the wife becomes the policy holder, while the husband who pays the premiums, is the insured person.
Tags: Life Insurance