A life insurance policy guarantees the insurer pays a sum of money to named beneficiaries you put down when the insured policyholder dies – in exchange for the premiums paid by you. If a loved one depends on your income, this is one way of securing income. They may decide to use the money for everyday bills, a mortgage or college, regardless it is a safety net for someone that may need the support in the future.
How Life Insurance Works
A life insurance policy can has two main components—a death benefit and a premium.
- Death Benefit—The death benefit or face value is the amount of money the insurance company guarantees to the beneficiaries identified in the policy when the insured dies. For example, the life insurance policy holder may be a parent, and the beneficiaries their children. The parent will choose the desired death benefit amount based on the beneficiaries’ estimated future needs. The insurance company’s underwriter will assess the insurable interest of the proposed the proposed beneficiaries and their qualifications for coverage by going over their age, health and any high-risk activities.
- Premium—Premiums are the money the policyholder pays for insurance. If the policyholder pays the premiums required, the insurer must pay the death benefit when the policyholder dies. Premiums are determined by death beneficiaries’ life expectancy. So factors age, gender, medical history, occupational hazards, and high-risk hobbies.
Call us directly 1-310-835-3373 or speak with a licensed agent at Uniamericainc.com to discuss which coverages best fit your lifestyle.
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