Premium for this type of insurance are larger than those for Accident Insurance because accidents are rather rare reasons for death. For this reason this Life Insurance is more appealing to specific groups of people: in age groups where potential for acquiring lethal illness is larger, number of financially dependant family members is larger and/or whi have substantial financial liabilities.
Life Insurance policy may also be used as a guarantee for loan liabilities for the insured or for his or her family members. In a situation when loan liabilities have longer and longer terms, in some cases exceeding 20 years, this protection may be especially important.
There are 3 main types of liefe insurance policies:
- Classic life insurance – amount insured is constant over the whole insurance policy term;
- Decreasing cover policy over the policy period – amount insured is gradually decreasing over the insurance period. This type of life insurance is typical in cases when Life Insurance is used as guaranty for bank loan.
- Decreasing cover policy during year – amount insured is gradually decreasing during year. This type of life insurance is also mostly used in cases when Life Insurance is used as guaranty for bank loan.
Life insurence policy is usually quite flexible as amount and frequency of premium payments, amount insured, beneficiaries, currency and other things can be easily adjusted.
Some insurance companies allow two people be covered by a single life insurance policy. In this case both persons are co-insured (equally insured) and the insurance pays out only once – after the death of the first of the 2 co-insured.
Usually the Life Insurance olicies can be extended to provide cover for:
- Critical illnesses.