Our lives are threatened by many risks, some bigger, others smaller, which affects our ability to work or even our life. Some of the risks are likely events, they can affect us or not, but there is a risk of death, which is a certainty, the question is only when it happens.
Life insurance is the way in which these risks are taken over by an insurance company, which in exchange for a pre-determined amount of money takes over these risks, and in the event of unwanted event, will compensate the insured person or his beneficiary.
Life insurance is a contract signed between the insurer and the insured in favor of a beneficiary, or of several beneficiaries. The object of this contract is the insured amount, which is agreed upon by both parties or at the insured’s request.
Basic risks are the risk of death and the risk of survival.
Also, additional insurance clauses can be attached to the insurance contract:
- serious affections
- hospitalization due to illness or accident
- surgery from illness or accident
- death from accident
- temporary / permanent disability from illness or accident
- exemption from insurance premiums
- temporary or permanent incapacity for work
There are several hundred types of insurance. They comprise two large classes:
Term Life Insurance
Term life insurance offers strict protection in the event of death for a specified period (up to 75 years), therefor the insurance premiums are generally low.
Permanent Life Insurance
Permanent Life Insurance has a protective component in the case of death similar to that of the term insurance and a saving component. For this reason insurance premiums are higher than those for term insurance. Instead, the holder may have access to money through various types of withdrawals or redemptions.