It’s Important to Understand Life Insurance
First, let’s discuss what life insurance is. This is a contract between two parties, one of whom promises to remit premiums in exchange for the promise of the other party to pay an amount upon the death of the insured. The insured party and the person who purchases the policy do not have to be one and the same. Sometimes a spouse may take out a policy on the other spouse; the one who takes it out is the policy owner, the other is the insured. Often companies have life insurance policies on some employees, such as the president. In this instance, the owner of the insurance is the company.
Benefits are, of course paid to beneficiaries. Insurance policies very clearly summarize all of the responsibilities of each of the parties to the contract. Exclusions can apply, such as an exclusion regarding suicide.
There are three main types of life insurance: whole life, term life and universal life insurance.
The main difference between whole life and term life is that there will be a guaranteed death payout with whole life, whereas with term, the death payout only occurs if the death falls within the specific term of the policy. Whole life insurance is desired by those who want lifetime coverage and do not want the premiums to increase as they age. Many folks also like the idea that whole life insurance contributes to a cash value. The fact that the policy will absolutely be paid out at some point makes it a costly policy.
Term life, on the other hand, will just be in force for a fixed “term”. The “term” is delineated in the life insurance policy and the policy only includes a death benefit, there is no cash accumulation. The term may be chosen to cover a time when insurance seems most important, for example when one’s children are growing. Because of the limitations, term life has the cheapest premiums.
Universal life insurance is based on a cash value. This cash balance is built from the extra of the premium over the cost of the insurance. From the cash value, the cost of insurance is deducted, and interest accrued is added. The interest gotten in universal life insurance policies are fixed in relationship to some kind of yardstick rate, such as a bond rate.
The premium of a life insurance policy is set based on the risk factor for the insurance company. This is why you will see that insurance premiums increase dramatically with the age of the applicant. Insurance actuaries figure what the risk the insurance company has of paying the death benefit, based on such factors.
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About New Brunswick:
New Brunswick, Canada, situated between the United States, the Gulf of St. Lawrence, the Northumberland Strait and the Bay of Fundy, is the only constitutionally bilingual province in the country, with a minority population of 32% of the population that is French speaking. The province was named after the ancestral home of the King of England, George III, Braunschweig, Germany and is known for its Bay of Fundy, a bay that has the largest tidal movements in the world, 16m each way (52 feet). The indigenous people called Mi’kmaq, whose name means “my skin friends” lived in New Brunswick before the arrival of Europeans and their history is shown by the Augustine Mound, built in 2500 B.C. The area was discovered by the French explorer Jacques Cartier in 1534 and over the next 150 years was settled by French colonialists, who referred to the region as Acadia. The British gained control of New Brunswick after the Seven Years War, and when they required allegiance to the King, many Acadians were expelled when they refused to comply.