Life Insurance Facts You Should Know

Many people have life insurance policies, which are considered as contracts between the person who took it out and the insurer. People contract one in order to have some form of guarantee that when somebody passes away, there is some form of financial help. There are facts that need to be explored and explained for these kinds of contracts because there are limitations to it.

Facts:
All policies that are contracted need some form of premium that the person who took out the policy needs to pay. A premium is usually paid at regular intervals, usually monthly, quarterly or yearly. Other terms may be acceptable by both the contractor and the insurer if there is a written agreement that is agreed upon. The person who is insured may or may not be the same person who took out the policy. The policy owner is the person who took it out while the insured can be anybody whom the owner has written down. Usually, another person can also be put down as the beneficiary of the contract. This means that the owner can insure someone else for the benefit for another person. There can be four entities involved in the contract, the insurer, the insured, the policy owner and the beneficiary.

There are also some limitations to the coverage for contracts that the person paying the premium is not the one who is listed down as the insured. This clause is put on the agreement to prevent the possible murder of the person covered by the policy by the beneficiary or the payer of the premium. There has to be an insurable interest between the person who takes out the policy and the person who is insured. This is means that the person who is paying for the life insurance needs to determine that there is a loss on his part if the person written down in the policy passes away.

Life insurance premiums are usually bigger than any other form because the coverage is also bigger. Coverage of the policy can include many things that are triggered when the person who was insured passes away. The way that the insured person dies is also subject to scrutiny for some policies. Natural death is the most common kind while accidental is also included. Suicides are sometimes included but may have some limitations and conditions such as the duration of time when the contract is issued. Other occurrences that may be limitations are civil commotions, riots, war and fraud. These are times when a person can be murdered for his policy coverage. This coverage is dependent on the agreement between the person paying the premiums and the company that issues the contract. Misrepresentation during the time that the policy is contacted can actually make the agreement null and void, which is why most firms insist on an executive physical checkup before they issue the life insurance contract. These are just a few of the facts that need to be clarified when a policy is taken out for someone.