A life insurance policy is a contract between you and an insurance company. In return for you making regular payments called premiums, under the terms of the contract, the insurance company is bound to pay a specified person an amount of money on the happening of a specified event. It is a good way of adding value to your estate so that your estate planning has real rewards for your family.
Insurer - is the company who receives the premiums and has to pay out the benefit.
Policy-owner - is the person that pays the premiums and decides who will receive the benefit.
Insured - is the person whose death or disablement triggers payment of the benefit. The insured and the policy-owner are sometimes one and the same person.
Beneficiary - is the person who receives the benefit on the death or disablement of the insured. The beneficiary can be the insured’s estate.
Premium - is the monthly or annual payment that the policy-owner must make to the insurer to keep the insurance cover current.
Benefit – is the amount that the insurer must pay the beneficiary when the trigger happens.
Nomination - is the part of the policy document in which the policy-owner specifies the beneficiary of the policy.
You would want life insurance so that if you died while you had children still at school and you didn’t want your spouse to have to work full-time to support them.
You would want life insurance so that if you died while you still had a mortgage it will be part of your estate plan that your debts would be paid off for your spouse.
You would want insurance to provide financial support in the event of your total and permanent disablement.
You would want income protection insurance provide you with an income while you were unable to work while you were temporarily ill or injured.