A Life Insurance Policy

What is it?

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.

 What Are the Components of a Life Insurance Policy?

  • 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.

 Why Would I Want One?

  • 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 would 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 to provide you with an income in the scenario where you are temporarily ill or injured.