Life insurance
What is life insurance?
Life insurance (life insurance) – it is a private insurance that provides protection for long-term interests of the insured.
The main purpose of life insurance – the accumulation of funds, such as retirement, age, wedding or other events in the life of the insured.
For life insurance includes all types of insurance, where the object of insurance in favor of human life.
Classic life insurance contract is that in the event of death of the insured to provide the specified beneficiary compensation for the loss. In the classical life insurance contract we are talking about life insurance. By entering into this agreement, the period of insurance can be chosen so that it covers, for example, the time the loan or the time when your kids are still growing themselves are not working.
Life insurance contract is usually concluded for a period of not less than one year, so life insurance can be combined cumulative and risk functions (such type of insurance is a mixed life insurance and endowment).
Mixed life insurance may also include accident insurance.
Endowment life insurance – a type of term life insurance, for which the sum insured is payable if the policyholder surviving to them before the deadline or in case of death of the insured to his heirs.
Life insurance for a fixed term (Term Life Insurance) may be very convenient and inexpensive way to protect your family and save money on insurance premiums.
If you are employed, which is more dangerous than your previous one, then the term of your work you will be more advantageous to have such a life insurance policy. Once you dismiss the dangerous work can safely cancel your temporary insurance without any penalty payments.
Benefits of insurance for a fixed term quite a lot. First of all, this type of insurance is very simple and intuitive, making it accessible to virtually everyone.
Risks, which covers life insurance:
The main risk from which protects life insurance is the risk of death of the insured and related financial losses beneficiaries. Typically, the risk of death include the risks of death from accident, illness or wrongful acts of third parties. Risk of suicide can be included in the contract, but only in exceptional cases, such as credit insurance. The inclusion of this risk must be accompanied by additional stipulations. Additionally, may be included in the contract risks permanent disability, survivorship, etc.
Insured event on the program of life insurance are:
- Survival to the end of term insurance;
- The death of the insured (could be “for any reason”);
- The death of the insured in an accident, an accident (the insured amount is doubled);
- Loss of health and disability from an accident (disability).
What determines the price (tariff) in life insurance:
In life insurance premium depends primarily on age, sex and health of the insured. In determining the value of life insurance mortality tables are used. Based on these tables are calculated the expected discounted value of the insurance payment. Already normally after this amendment on the health of the insured, and also takes into account the profits that should get the insurer and its costs (amendment to the insured’s health has much more influence than in other types of personal insurance).
Rates for life insurance up 10.4% of the sum insured and will depend on:
- Age (the younger the insured, the lower rate)
- Sex (female rate is lower than for men)
- A set of risk and insurance programs (only the risk of death, accumulation, death from any cause or disability)
How does life insurance?
Policyholder pays the insurance premium, calculated by the actuary of the insurance company for the options outlined in the contract of life insurance. But the insurer, in turn, contract (10 or 20 years) agrees to make money to protect the policyholder, the policyholder to earn investment income, the average value of which before the crisis amounted to 14-17% in UAH (including 4% guaranteed ).
It should be noted that the insurance companies, according to the Law of Ukraine “On Insurance”, ensure the investment income of up to 4%, while the remaining bonus – charged the insured on the results of investment activities of insurance companies.
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