Types of life insurance
The importance of personal insurance is focused on the elements of risk that result in loss of income due to death, reaching a certain age, or a long or limited period, as is the case in cases of illness, total or permanent disability that terminates service, or any work that an individual may do.
Life insurance is divided into two main sections, which are
individual life insurance and group life insurance. Each of these two sections
has its own characteristics, types, and advantages, but each of them serves the
same purpose, which is to provide insurance protection for the individual in
the event of a decrease in income or interruption, in cases of death, illness,
disability, or old age. Each of them works to create the financial savings that
a person needs for special occasions, such as marriage, educational expenses,
and treatment or illness expenses.
Individual life insurance
In terms of insurance coverage, individual life insurance is
divided into two main sections: the first section is temporary insurance and
the second section is savings insurance.
Temporary life insurance
Its purpose is to compensate the insured in the event of
death during the insurance period by disbursing the insured amount. This type
of insurance is characterized by a low premium. This type has no liquidation
value or recovery value. It is similar to insurance against theft accidents or
car insurance that expires at the end of the policy term and its duration
ranges from Insurance in this type is between one and 30 years of age, or when
the insured reaches a specific age, such as 60, 65, or 70 years.
One of the most important types is temporary, decreasing
insurance, in which the insurance begins with a large amount, let it be ten
thousand pounds, then it decreases annually, let it be an amount of one
thousand pounds, until it reaches zero after ten years (for a ten-year policy).
This type of insurance is suitable as a guarantee for loans in the case of
purchasing housing or a car in installments, as it guarantees In this case, the
document pays the rest of the installments that must be paid to the lender in
the event of the death of the insured. There is another type of temporary
insurance, which is increased temporary insurance, where the insurance starts
with a small amount, let it be five thousand pounds, and then increases
annually at a rate of 1,000 pounds, for example... to reach 25 thousand pounds.
One pound after 20 years (for a twenty-year policy). This type of insurance is
suitable for cases where the risk of death at the start of the insurance is
high (after a surgical operation, for example) and the risk decreases as the
insurance period continues.
Savings insurance
Savings insurances, the most famous of which are life
policies and mixed insurance. This type of insurance combines insurance and
savings. The difference between life insurance and mixed insurance is that
mixed insurance has a specific period, let it be 10 or 20 years. As for life
insurance, it continues throughout the life of the insured, as the insurance
amount is paid in the event of the death of the insured. However, if the
insurer desires Upon liquidation of the policy, a recovery value can be
disbursed commensurate with the term of the insured and the premiums paid.
As for mixed insurance, the insurance amount is paid at the
end of the insurance period, unless death occurs before the end of the
insurance period, in which case the insurance amount is due upon death, and the
insurance premium for this type of insurance is relatively high and varies from
one insurance company to another.
This type is divided into two main important sections - the
first section is mixed insurance that shares in profits, and the second section
is mixed insurance that does not share in profits - and the difference between
these two sections is that the policies issued with participation in profits
have relatively high premiums, because the method of calculating them from an
actuarial perspective depends. On the basis of a low interest rate, the company
disburses profits to policyholders in the form of increased insurance amounts -
and these increased profits depend on the interest rate that the company was
able to achieve in investing the insured’s funds. Savings insurance is not
limited to mixed insurance only, but many different types have appeared - and
for example:-
(1) Pay part of the insurance amount during the insurance
period, let it be after ten years, and pay the other part of the insurance amount
at the end of the insurance period.
(2) Adding additional coverage to the insurance that is paid
in addition to the insurance amount in the event of death. For example, a
monthly or annual pension from the date of death until the end of the insurance
period, when the original insurance amount is disbursed.
And other different types.
There is also a special type known as fixed-term insurance, where the insurance amount in this case is not disbursed except at the end of the insurance period, whether the insured is alive or not. If the insured dies before the end of the period, the policy is exempt from paying premiums, and this insurance can be granted to the head of the family. To build capital for his children.