A life insurance policy document is nothing less than a legal contract and the terms that govern the contract define the limitations on the event which is insured. Often exclusion of a specific kind is written down into the document in order to limit the insurer's liability in lieu of the contract: for instance specific fatal events like civil commotion, riots, war and suicide are specifically included in the contract in some instances.
Life insurancein India can be categorized into 2 groups:
Policies for Protection – These are policies which are designed in such a fashion so as to provide a prescribed benefit in the occurrence of a predetermined event. Generally a lump sum amount is paid as claim. The most common form of such policy document is a term insurance.
Policies for Investment – In this type of policy documents the central objective is not to cover the loss of life but to facilitate growth of wealth by way of single or regular premiums.
One common mistake that most people make is, think of policy holder and the insured as one. Many a times these words are used interchangeable, it is although generally found that the insured and the owner are most often the same person. For instance, if Jack opts for a policy that covers his own life, than Jack is both the insured and the owner of the policy. But if Julia, his spouse, buys a life insurance policy on Jack's life, then Jack becomes the insured and Julia the owner. The owner of the policy is the person who is supposed to pay the stipulated premium for the policy and is also the guarantor.
Terms of Contract
In a policy of life insurance in India there are Distinct provisions which may apply, such as terrorism clause in which the policy document becomes valueless in the event of death of the insured due to an act of terrorism within the policy period. Misrepresentation or willfully misleading the life insurance company can also be ground for the nullification of the policy document.
The insurance company makes a pool of money by the premium paid by each policy holder. From this pool of money the company finances its operations as well as pay for the claim that arise. The major chunk of income of any insurance company comes directly from the paid premiums; this has a rationale, as money that may be earned by way of investments, even under the most ideal of market conditions, will never equal to the claims that the company has to pay.
The amount of premiums that are charged for each policy document is directly proportional to the age of the insured because, as people grow older the probability of their death also increases. Underwriters are employed by the insurance companies to determine the purpose of the insurance.
Life insurancein India can be categorized into 2 groups:
Policies for Protection – These are policies which are designed in such a fashion so as to provide a prescribed benefit in the occurrence of a predetermined event. Generally a lump sum amount is paid as claim. The most common form of such policy document is a term insurance.
Policies for Investment – In this type of policy documents the central objective is not to cover the loss of life but to facilitate growth of wealth by way of single or regular premiums.
One common mistake that most people make is, think of policy holder and the insured as one. Many a times these words are used interchangeable, it is although generally found that the insured and the owner are most often the same person. For instance, if Jack opts for a policy that covers his own life, than Jack is both the insured and the owner of the policy. But if Julia, his spouse, buys a life insurance policy on Jack's life, then Jack becomes the insured and Julia the owner. The owner of the policy is the person who is supposed to pay the stipulated premium for the policy and is also the guarantor.
Terms of Contract
In a policy of life insurance in India there are Distinct provisions which may apply, such as terrorism clause in which the policy document becomes valueless in the event of death of the insured due to an act of terrorism within the policy period. Misrepresentation or willfully misleading the life insurance company can also be ground for the nullification of the policy document.
The insurance company makes a pool of money by the premium paid by each policy holder. From this pool of money the company finances its operations as well as pay for the claim that arise. The major chunk of income of any insurance company comes directly from the paid premiums; this has a rationale, as money that may be earned by way of investments, even under the most ideal of market conditions, will never equal to the claims that the company has to pay.
The amount of premiums that are charged for each policy document is directly proportional to the age of the insured because, as people grow older the probability of their death also increases. Underwriters are employed by the insurance companies to determine the purpose of the insurance.
