Life insurance is a very important purchase for everyone. It is needed by everyone. It is a big decision to make. If anything was to ever happen to you, it helps the people in your family pay for your bills and your funeral costs. It can also help pay for your children’s future education, continuing a family business and anything else you may have left behind. No one knows what will happen, but everyone does die at some point, so why leave behind a burden for someone else to pay for, if you can help it. Some people think health insurance will help to keep you from dying, but that doesn’t always work out that way, and if something does happen then health insurance does not help pay for your bills and your family is still stuck with a burden. Some people are not sure what life insurance is. Well that’s simple; it’s a contract between the policy holder and the insurer. It simply states that the insurer agrees to pay a sum of money upon the occurrence of the insured individual’s death or other event, such as terminal illness or critical illness. The policy holder does have to pay a certain amount every so often that is a premium. In some countries the bills and funeral costs are included in Policy Premium. It also states that a benefit is paid to any beneficiaries that you may have. There are different events that can be covered not just Death. These events can be different serious illnesses. Life insurance policies can fall into two major categories; protection policies and investments. A protection policy is designed to provide a benefit in the event of a specified event, which is usually a lump sum payment. The most common form of this is term insurance. An investment policy is designed to facilitate the growth of capital by regular or single premiums. These are usually whole life, universal life, and variable life policies.

The policy holder and the insured can be two different people. Someone else can take the insurance out on you and then they are the policy holder and then you are the insured. The policy holder is the person that has to pay the premiums though. In the cases where the policy holder is not the insured, the insurance companies tend to limit policy purchases to those with an insurable interest. For those policies it is usually limited to close family members and business partners because they usually have insurable interest. The insurable interest requirement usually demonstrated that the purchaser will benefit some kind of loss if the insured dies. Such a requirement prevents people from benefiting from the purchase of purely speculative policies on people they expect to die. With no insurable interest requirement, the risk that a purchaser would murder the insured for insurance proceeds would be great. In at least one case, an insurance company which sold a policy to a purchaser with no insurable interest was found liable in court for contributing to the wrongful death of the victim, which was the insured. If the insured commits suicide then the policy becomes nulled. Any misrepresentations by the insured on the application are also grounds for nullification. Most US states specify that the contestability period cannot be longer than two years; only if the insured dies within this period will the insurer have a legal right to contest the claim on the basis of misrepresentation and request additional information before deciding to pay or deny the claim. The face amount on the policy is the initial amount that the policy will pay at the death of the insured or when the policy matures, although the actual death benefit can provide for greater or lesser than the face amount. The policy matures when the insured dies or reaches a specified age, which is usually 100 years of age.