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Life Insurance Worldwide Directory
Life insurance definition is that one provides cash benefit
to a decedent's family or other designated beneficiary by receiving a policy
and paying a premium in exchange. Life insurance can be divided into two basic
classes – temporary and permanent. The risk assumed by the insurer is the risk
of death of the insured. There are three parties in a life insurance transaction;
the insurer, the insured, and the policyholder (or owner). The insured and the
policyholder are often the same person. The policyholder will designate a beneficiary
to receive the policy proceeds upon the death of the insured.
The life insurance policy holder may change the beneficiary
unless the policy has an irrevocable beneficiary designation. With an irrevocable
beneficiary, that beneficiary must agree to changes in beneficiary, policy assignment,
or borrowing of cash value. The life insurance policy becomes null if the insured
commits suicide within usually two years time. Any misrepresentation by the
owner or insured on the application is also grounds for nullification.
Most life insurance contracts have a contestability period,
also usually a two-year period; if the insured dies within this period, the
insurer has a legal right to contest the claim and request additional information
before deciding to either pay or deny the claim for proceeds. The cost of life
insurance is determined by Actuaries using mortality tables statistically based
on average life expectancies calculated by insured's age, gender, and whether
they use tobacco or not.Upon of the insured’s death, the insurer will require
acceptable proof of death before paying the claim. The normal minimum proof
is a death certificate and the insurer's claim form completed, signed, and often
notarized.
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