Life Insurance Calculator

Do you have a life insurance policy? Do you know why it is so important to have a life insurance? A life insurance policy is very important since it provides protection to you and your near and dear ones. People who are employed in risky professions such as firefighters, dare devils, members of the armed forces etc are exposed to grave risk to their lives & therefore require a life cover more than others. Getting your life insured is equivalent to getting it financially assured. The policy is a contract between two parties: The individual who is getting his life insured and the insurer. A life insurance provides a financial cushion to the family members of the deceased.

Depending upon the type of policy that you have, you are required to pay a fixed amount called premium, to the insurer. In case of death, the insurer pays the insured amount to your family. This amount is irrespective of what you may have paid for in the form of insurance premium. For example Mr. Wilson pays $500 per annum towards the premium of his life insurance that has an assured sum of $50,000. It means that in case of Mr. Wilson’s death, his family will be paid $50,000 as compensation from the insurance company to provide for their future needs.

Now you may wonder why you should insure your life. Well, on getting a life insurance policy you are basically protecting your family against any financial crisis. Mr. Wilson was just 42 when he died in a road accident. The family did not have any savings to survive on. But thankfully, Mr. Wilson had a life insurance policy. His family got the insured amount from the insurance company, which saved them from going broke.

Under a life insurance policy the policyholder nominates someone to get the assured amount in case of his death. It is based upon the insured event that is related to the policyholders’ life. The covered events can include natural death as well as fatal accidents.

The legal contract may have some limitations as well. Insurance is an indemnity contract. The aim of insurance is minimization of losses rather than making a profit. Therefore a beneficiary may not get the assured sum in case the insuree commits suicide or in case of a fraud where the principle of Utmost Good Faith is violated.

The life insurance policies are basically of two categories - the protection policies and the investment policies. The former are designed for protecting the interest of the beneficiary and are meant for specific events whereas the latter are aimed at increasing the capital sum. An investment policy is more of an investment & less of insurance.

In some cases the policy may include more than three parties, the insurer, the insured and the policy owner. For instance, parents often get their childrens’ lives insured. In this case the insured are the children who enjoy the advantage while the parents are the policy owner who pay the premium.

The amount and the premium of a life insurance policy depend on the type of policy you choose and also on the age of the person insured. For e.g. term-insurance is cheaper as compared to a whole-life policy. Also, younger insurees pay lower premiums compared to older insurees since young people are expected to live longer. The term of a life insurance policy is another factor that affects it. The policy may be a temporary policy or a permanent policy.

The terms and conditions of diferrent insurance policies differ. The face value of the policy, maturity period, interest rate, premium and other such factors depend upon the policy. However, life insurane is important if you want to protect your family against any financial crisis. So if you do not have a life insurance policy already, get one right now.