Life insurance
Life Insurance
Life insurance (pronunciation: /ˈlaɪf ɪnˈʃʊərəns/) is a contract between an insurance policy holder and an insurance company, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness may also trigger payment.
Etymology
The term "life insurance" is derived from the English words "life" (meaning the existence of an individual human being or animal) and "insurance" (a practice or arrangement by which a company provides a guarantee of compensation for specified loss, damage, illness, or death).
Types of Life Insurance
There are several types of life insurance, including:
- Term life insurance: This is the simplest and often the cheapest way to insure your life. It covers you for a fixed period and pays out a one off lump sum if you die during the policy term.
- Whole life insurance: This is a type of permanent life insurance that guarantees that the insurer will pay the policy’s death benefit as long as the policyholder pays the premiums.
- Universal life insurance: A type of permanent life insurance with an investment savings element and low premiums.
Related Terms
- Beneficiary: The person or entity entitled to receive the death benefits from a life insurance policy after the death of the insured.
- Premium: The amount of money that an individual or business must pay for an insurance policy.
- Policyholder: The person who owns the insurance policy. This is usually the insured person, but it may also be a relative of the insured, a partnership or a corporation.
External links
- Medical encyclopedia article on Life insurance
- Wikipedia's article - Life insurance
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