The first insurance company to offer a ‘modern-day’ policy was back in the early 1700s in the city of London and was known as the Amicable Society for a Perpetual Assurance Office. It covered individual’s funeral expenses and looked for the remaining family members financially. If you want to read up on how it was implemented, this online source will be helpful.
However, to say that it is still the ‘same’ might not be the right phrase to use, the underlying reasons for it have remained the same, but in the 21st century, this idea has expended to a somewhat greater degree in its offerings and options.
What Is It?
So, the question is, what exactly is this concept of life-insurance? For those who are sitting on the fence, were here to help you out.
As the name suggests its insurance/ insuring your life. It is a written agreement between two parties i.e. an insurance provider or insurer and the insured or policyholder.
The contract is based on the principle that the insurer agrees to pay a certain amount of money (also known as the benefit) to the policyholder in exchange for a premium.
If the policy holder dies, or perhaps gets terminally ill this payment is triggered and the sum of money that the insured party was paying towards his insurance every month (the premium), will either be released as a lump-sum to his or her other family members i.e. the persons named on the original contract or if agreed that this will be sent every month, then this is what will take place.
This payment will also cover things such as funeral costs which can also be included in the contract. It is common practice to include specific exclusions in the legal paperwork to limit any liability of the insurer, for instance relating to events such as war, riots, suicides, civil unrest, alcohol and drug use and many others. Which are all included under each of their particular clauses.
It is important to make sure you understand these on your contract. You can read elaborated information on each of these on this online source https://budgeting.thenest.com/common-term-life-insurance-exclusions-33370.html
Reasons That Will Hinder Your Application
As with all things, life-insurance is also something that you need to apply for and wait for the answer. Surprisingly enough, some reasons can hinder your application. Below is a list of a few scenarios:
- 1. If your past-time activities involve any type of risk-factor such as motor racing sports, mountaineering, ski-jumping, bungee-jumping, parachuting/paragliding.
- 2. Working in a job that is considered ‘high-risk’ for example construction, forestry, health care, disaster recovery, military occupations or mining.
- 3. If you don’t fall under any other category but are still at risk because of specific detrimental habits like alcohol abuse or chronic smoking and sometimes if you are over-weight by a mile, this too can lower your chances of the application being accepted.
- 4. In cases where you already have a history of particularly serious health problems such as cancer, diabetes and even high blood pressure.
This is not to say that all the insurers approach all the above issues the same way. Due to the immense amount of competition in the market, there is a high possibility that they could work around it.
For sake of clarification, it is always advisable to get in touch with a reputable expert in the matter for example services such as PolicyReviews can give you the best advice on where you stand in the matter and help you decide on the best one for you (and any family members involved.)
other valuable tips:
Some insurance policies will only cover you for a fixed period, after which it stops the pay-out, while others will pay out up until you die, no matter when that happens. There is another option that people have and this is the whole-of-life-policy.
The size of the pay-out will, of course, depend on your policy. Some insurers advise the applicant to set up the policy in a trust, and as such, the payment will be made to those trustees to distribute it accordingly.
We hope this information has given you some idea of what to look out for when you apply for life insurance and what would make it less likely to be accepted.
Image Credit: by envato.com
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