The Ins And Outs Of A Life Insurance Policy
Having life insurance is mandatory for anybody that has someone dependant upon them, financially or emotionally. Now, before you can apply for a life policy, you must understand how the life insurance industry operates. Life insurance is not hard to understand at all. There are two entities involved in every life insurance policy process, namely the insured, the company you’ll obtain the life policy from, and the insured, the person that owns the policy, in this case you. You, the insured or covered person, agrees to pay a small amount of money for a fixed number of years. This amount is known as policy premium. In the unfortunate event of the policy holder dying during the policy period, the insurance company will pay out the policy amount to the beneficiaries selected by the insured individual.
A life policy is like a legal contract. There are specific clauses to agree to. For example, if the insured should commit suicide within the first two years of having the policy, the insurance company won’t pay out the claim. Or if the insured provides information that are discovered to be wrong, the insurance company can declare the policy void.
Policies are priced in such a way that they cover claims to be paid, administrative expenses and of course, they need to make some profit. So, for each person that applies for a policy, a professional called an “actuary” determines the individual’s mortality table. They do this by considering the person’s age, gender, health, hobbies and interests and habits. The family health history also plays a role when determining what the person’s life policy premium will be.
This investigation done by the insurance company is called underwriting. They’ll investigate the life policy candidate’s life by investigating their family history, health and way of living. If the company find the applicant to be too much of a risk to insure, they will not grant them a policy. The company will, if the individual is a high risk, but still insurable, hike their monthly premiums because of the high risk.
Although different insurance companies will have different stipulations, each of them have specific standard industry clauses as well, for example the beneficiary clause. The clause declares that only the policy holder can change, remove or add beneficiaries onto their policies, for apparent reasons of course. Nonetheless, all insurance providers have terms and conditions and it is important that you go through and understand these clauses.
Upon the insured’s death, the insurance company requires a proof of death certificate before proceeding with payment. If the insured’s death is found to be suspicious in any way, the insurer may choose to investigate the death. If there are no signs of foul play, the insurer will pay the claim to the beneficiaries in roughly Two weeks.
Obtaining a life policy is a crucial part of each and every person’s life and really should not be overlooked. There are ways to make your policy premium cheaper, but always make sure that you are properly covered, as being under insured can have devastating consequences.
For more information on life policy visit our site on http://www.insurance.co.za
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