Question

Briefly explain the objective and concept of life ins urance. Use the folllowing to compliment the response.

(a) List the primary steps to devise a proposoal to buy a life insur ance.

Answer 1

Life Insurance is an agreement between the insured and the insurance company whereby the insured agrees to pay premium over the life of the policy and insurance company guarantees a sum of payment to the beneficiary of the insurance policy either on death of the insured or after the term of insurance policy to the insured if the insured survives term of the policy. Life insurance is a kind of protection to the insured on his life.

The following are some of the primary steps to keep in mind before buying an life insurance.

1) It is important to choose a reliable insurance company to buy the life insurance and understanding the terms and conditions of the insurance

2) The term of the insurance policy and the age of the insured is also important before taking insurance policy.

3) The premium amount to be paid per year or monthly, the insured needs to allocate part of its income towards premium payment, hence based on its income he should select the premium amount based on which he would receive amount after the insurance policy.

4) The lumpsum amount the insured would receive after the insurance policy is expired.