Two Types of Life Insurance Policy: Term and Permanent
A Life Insurance Policy is a mortality-based contract of insurance issued by a life insurance company. The life insurance policy guarantees payment of death benefits at the death of the insured person. The rationale and purpose in society and business for the life insurance policy is that there is economic value on a human life. This is also referred to as human life value. So, a life insurance policy is often required or at least desirable in situations where a person's death would cause a negative financial impact on those who depend on that person for economic reasons.
Consider a family that relies on both husband and wife for the income it needs to pay monthly expenses as well as provide for children and retirement. A life insurance policy on both the husband and the wife would be a good idea in this situation. The life insurance policy can provide for final medical bills, funeral expenses, total or partial mortgage balance payoff as well as provide a fund for the surviving spouse to pay college tuition.
Business partners can use a life insurance policy to buy one another's estate out in the event of the untimely death of a partner. A valuable employee in a business whose death would cause financial peril to the enterprise is often insured with a life insurance policy.
There are two types of life insurance policy. There is the term life insurance policy and the permanent life insurance policy. The term life insurance policy is for a temporary life insurance need such as the period of time during which children are at home and need to be provided for financially. Another example would be a person involved in a business who borrows money from a lender and needs a life insurance policy to guarantee the lender that the loan will be paid back even in the event of death.
The life insurance death benefit can is usually paid in a lump sum although the beneficiary can elect to receive the life insurance death benefit in the form of an annuity.
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