What are the basic features of a life insurance plan?
Asked by: Lorenza McClure | Last update: July 18, 2023Score: 4.9/5 (12 votes)
Compared to other forms of permanent coverage, a whole life policy has three defining characteristics: The level premium remains the same for life. The death benefit is guaranteed as long as the guaranteed premiums are paid. The policy includes guaranteed cash values that grow at a guaranteed rate.
What are the main features of insurance?
- Sharing of Risk. ...
- Co-operative Device. ...
- Value of Risk. ...
- Payment at Contingency. ...
- Payment of Fortuitous Losses. ...
- Amount of Payment. ...
- A large number of Insured Persons. ...
- Final Words.
Which of the following is major feature of life insurance?
Financial Security
The primary importance of a life insurance policy is that it provides your family with long-term financial security. Life insurance policies provide a lump sum money to financially support your family in the case of your early demise.
What is the basis of a life insurance policy?
Cost basis is the total amount that you paid into an asset, like a stock, your home or even a permanent life insurance policy. It is usually calculated starting with the purchase price or, when it comes to permanent life insurance, the premiums you pay on your policy.
What are the three basic functions of a life insurance company?
- Insurance provides protection.
- Insurance provides certainty.
- Risk-Sharing.
Types Of Life Insurance Explained
What are the two basic types of life insurance?
Types of life insurance explained. There are two primary categories of life insurance: term and permanent. Term life insurance lasts for a set timeframe (usually 10 to 30 years), making it a more affordable option, while permanent life insurance lasts your entire lifetime.
What are the three main types of life insurance?
Whole life insurance, universal life insurance, and term life insurance are three main types of life insurance.
What are the three benefits of life insurance?
- Income replacement for years of lost salary.
- Paying off your home mortgage.
- Paying off other debts, such as car loans, credit cards, and student loans.
- Providing funds for your kids' college education.
- Helping with other obligations, such as care for aging parents.
What are the 7 types of life insurance?
- Term life insurance.
- Whole life insurance.
- Universal life insurance.
- Variable life insurance.
- Burial insurance/funeral insurance.
- Survivorship life insurance/joint life insurance.
- Mortgage life insurance.
What is the importance of life insurance?
Having life insurance will give you peace of mind. Life is uncertain, and life insurance can offer financial assistance to your family when you are no longer around. You can also plan your retirement by taking a retirement plan where you will receive a monthly income.
Which of the following is not a feature of insurance?
The functions of insurance are risk sharing, assisting in capital formation, economic progress, etc. Lending of funds is not a function of insurance.
What are the 4 types of life insurance policies?
- Term Insurance Plans. Term insurance protects your family's financial future if something were to happen to you. ...
- ULIPs – Unit Linked Insurance Plans. ...
- Endowment Insurance Plans. ...
- Money Back Insurance Plans. ...
- Whole Life Insurance Plans. ...
- Child Insurance Plans. ...
- Retirement Insurance Plans.
What are the 4 types of insurance?
- Home Insurance. As the home is a valuable possession, it is important to secure your home with a proper home insurance policy. ...
- Motor Insurance. Motor insurance provides coverage for your vehicle against damage, accidents, vandalism, theft, etc. ...
- Travel Insurance. ...
- Health Insurance.
What are the four types of term insurance?
Term insurance plans, too, come in various forms. Namely, level term insurance, increasing term insurance, decreasing term insurance, the return of premiums plans, and convertible term plans.
What are the main features of whole life insurance quizlet?
Whole life insurance features more guarantees than any other form of permanent life insurance available today. It provides guaranteed death benefit protection for the insured's whole life. No matter when the insured dies, the policy pays the face amount stated in the policy.
What are the five benefits of insurance?
- Protection for you and your family. ...
- Reduce stress during difficult times. ...
- To enjoy financial security. ...
- Peace of mind. ...
- A legacy to leave behind.
What are 5 advantages of insurance?
- Providing Security: ADVERTISEMENTS: ...
- Spreading of Risk: The basic principle of insurance is to spread risk among a large number of people. ...
- Source for Collecting Funds: ADVERTISEMENTS: ...
- Encourage Savings: ...
- Encourage International Trade:
What is the most common life insurance policy?
Whole Life
Whole life insurance is the most common type of permanent insurance policy. In addition to providing cash benefits to your beneficiaries upon your death, the coverage comes with guaranteed cash value during the life of the policy.
What term life insurance means?
A term life insurance policy is the simplest, purest form of life insurance: You pay a premium for a period of time – typically between 10 and 30 years – and if you die during that time a cash benefit is paid to your family (or anyone else you name as your beneficiary).
What are the four types of insurance that most people need?
...
- Life Insurance. Life insurance provides for your family if you unexpectedly die. ...
- Health Insurance. ...
- Long-Term Disability Coverage. ...
- Auto Insurance.
What are important provisions in most life insurance policies?
Most states have laws requiring certain provisions to be included in life insurance policies and prohibiting the inclusion of other provisions. Examples of provisions commonly required by law are the free look, the grace period, the incontestability clause, and the reinstatement provision.
What is the difference between life insurance and term life insurance?
Term life insurance provides coverage for a set period of time, typically between 10 and 30 years, and is a simple and affordable option for many families. Whole life insurance lasts your entire lifetime and also comes with a cash value component that grows over time.
What are the 5 parts of an insurance policy?
Every insurance policy has five parts: declarations, insuring agreements, definitions, exclusions and conditions. Many policies contain a sixth part: endorsements.
What is the main purpose of insurance?
Purpose of insurance
Its aim is to reduce financial uncertainty and make accidental loss manageable. It does this substituting payment of a small, known fee—an insurance premium—to a professional insurer in exchange for the assumption of the risk a large loss, and a promise to pay in the event of such a loss.