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TOPIC: TYPES OF INSURANCE
CONTENT: (a) Life insurance
(b) Non life insurance
Sub-topic 1: Life insurance
There are different types of insurance which can be grouped into; life insurance and non life insurance.
Life Insurance: Life insurance is the type insurance policy that covers an event that is certain to happen. This type of cover is often referred to as assurance rather than insurance. There two major types of life assurance; whole life and endowment policy.
- Whole life policies provide for payment after the death of the insured regardless of when the death occurred. Premiums are usually paid quarterly or annually by the person whose life is insured or by his spouse. The idea is that when the insured dies, someone will benefit from the policy, for example a spouse or a dependent.
BENEFITS OF WHOLE LIFE POLICIES
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- It provide for the welfare of the dependents in the event of death.
- It could be used as collateral for bank loan.
- It could be used to provide for policyholder’s funeral after death.
- The policy has the potential of increasing valve.
- Cash valve can be borrowed for some unexpected expenses,
Endowment policy: This policy provides a payment of a basic sum at a certain age or on the death of the insured, whichever occurs first. This provides not only for the dependents, but also a useful sum of money for the insured if they survive the period covered by the policy. The insured pays a monthly premium. In endowment policy, there are variations that can be built into it such as;
Family income benefit cause: This policy provides that the family of the policy holder be paid a stated amount at intervals until the policy is discharge in event of pre mature death.
Double- accident benefit: This provides that double the amount assured be paid to the dependents of the policyholder in the event of accident not natural cause.
Children’s education cause: This provides that the amount assured be paid to the children for the purpose of their education. The main purpose of this policy is that the insured is rest assured that the family will be able to go on with life even if he is not around.
BENEFITS OF ENDOWMENT POLICY
(i).The benefit is paid at the end of the term.
(ii) It also allows the policy holder to cash a sum of money, if they survive the period covered in the policy.
- Annuities: This is a form of pension in which an insurance company, in return for a certain sum of money agrees to repay this money plus the investment income that it is able to earn over an expected period of time.
- Term Assurance: This is the oldest form of assurance policy. In this policy, payment will be made to the assurer if the life assured dies within the specified period.
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