Q: What is Life Insurance?
A: Life insurance is a contact between an insurance company and the insurance policy owner(s). The insurance company pays a cash amount or death benefit to the beneficiary(s) named in the policy upon the death of the insured named in the policy.
Q: Who is a Policyholder?
A: A policyholder is the person who’s contacted the insurance company to purchase an insurance policy. The person pays premium as considered for the agreement between himself/herself and the insurance company.
Q: Who is a Policy owner?
A: A policy owner is the person who the policy covers, he is the person that benefit from the policy. He could be the same as the policy holder or a third person e.g. creditor, child, spouse.
Q: What is a premium?
A: Premium is the amount of money paid by the policy holder in consideration for the agreement
Q: What is sum assured?
A: Sum assured is the amount the policyholder wants to get at the end of the policy period and on which basis the premium is calculated.
Q: What is mode of payment?
A: Mode of payment is the term of premium payments for a life insurance policy. Available modes are annual, semi-annual, quarterly and monthly.
Q: How do I choose the duration of coverage (Policy Period?)
A: Your coverage length will depend on your individual circumstances. Factors you should consider include your age, your spouse’s age, your children’s age, the length of financial obligations (e.g. mortgage, loan, income) and the number of years until retirement.
Q: How do I determine the amount of coverage I need (Sum Assured)
A: Your sum assured will depend on your individual circumstances. Factors you should consider include anticipated final expenses(e.g. medical bills and burial cost), living expenses for your surviving family members, any outstanding loans, the anticipated education cost for your children, estate taxes, and business continuation expenses. Most important you’re your expected income and anticipated inflation.
Q: What happens at the end of the life insurance term period?
A: The life insurance policy will terminate at the end of the term period. However, you may have the option to renew the policy on an annual basis without providing evidence of insurability, or collect your maturity claim. (Sum assured)
Q: Will my premium change each year?
A: No, your premium rates are guaranteed to remain the same during the entire term period. However, in certain type of policy the premium increase at a percentage chosen by you on which you want the sum assured to increase to hedge against inflation.
Q: Will my proposal be accepted automatically?
A: No the insurance underwrite each proposal they receive, this include review of your current health status, medical history, family history among other things.
Q: What happens to my initial premium payment if I am not accepted or decide not to accept the insurance company’s offer?
A: Any payment you make will be refunded to you if you are not approved or if you decide not to put your policy in force.
Q: What is Accidental Death Benefit Rider?
A: The accidental death benefit is an optional policy provision that pats an additional amount over and above your policy coverage amount in the event the insured’s death is caused by an accident.
Q: What is the Waiver of Premium Rider?
A: The waiver of premium rider is an optional policy provision that provides for the payment of a life insurance policy’s premium in the event of the total disability of the insured. Age limitations and coverage maximum usually apply.