Life Insurance 101(2)

Operation

There are four legal entities in life insurance transactions: the insurer, the insured, the insured and the beneficiary. The insurer is usually an insurance company, and the insured and the insured are often the same person. For example, if Zhang San bought life insurance, he was the insured and the insured; but if Zhang San Li's wife bought life insurance for Zhang San with Zhang San's consent, Li Si was the insured and Zhang San was the insured. . The insurer and the insured form the parties to a life insurance contract and the insured is a party to the insurance contract. Another important relative is the beneficiary. The beneficiary is the person who received the insurance money due to the death of the insured. The beneficiary is not a party to the insurance contract and cannot decide for himself whether he will benefit from it, but he is chosen by the insured. If the insured wishes to change or designate the beneficiary, the insured must accept and the beneficiary must accept the change.

The life insurance contract, like other insurance contracts, is a legal contract that specifies the duration and conditions for taking risks. In the disclaimer, certain restrictive clauses, including the suicide clause, were agreed. The suicide clause states that if the insured commits suicide within a certain period of time (usually two years) after the insured, the insurer will not be liable for payment. Most life insurance contracts have an observation period (usually two years). If the insured dies during this period, the insurer has the legal right to decide to pay the insurance premium or reimburse at first.

When the insured dies or reaches the age specified in the insurance contract, the insurer pays the insurance premium. One of the reasons people buy life insurance is to prevent beneficiaries from having financial problems due to the death of the insured. Insurance income can cover funeral expenses and other deaths and can replace the deceased's salary with investment income. Another reason to buy life insurance is that life insurance can be used for family real estate planning. Prevent life after retirement from being affected by the income reduction caused by retirement.

The insurer's rate policy is related to the amount of insurance premiums to be paid, administrative costs and predetermined benefits. The amount of the expected insurance payment is determined by referring to the mortality table via insurance statistics. The mathematical methods used in insurance statistics are probability theory and mathematical statistics. The mortality table is a table showing the average remaining life (average remaining life). Usually, the mortality table only takes into account the age and sex of the insured.

The insurance company collects insurance premiums from the insured or the insured and uses the capital and interest of the funds over a period of time to determine the amount of the insurance payment. Therefore, the life insurance rate is very sensitive to the age of the insured because the insurer believes that the insurance premium paid by the senior is too short for the investment.

Because harmful habits can have a negative effect on the insurer's business performance, the insurer will conduct a survey of the insured's survival to the fullest extent possible under the policy. The insurer will request and record the lifestyle and health status of the insured in as much detail as possible before underwriting. Under certain conditions, such as a high amount of insurance or the alleged concealment of reported issues, the insurer will continue its investigation. In many cases, the insurer obtains the information that can be obtained from the insured's physician.

The law does not require life insurance to cover all people. Insurance companies determine who can insure and who refuses to cover them for health and lifestyle reasons. However, if the risks caused by an unhealthy lifestyle or a lower quality organization can be estimated, the insurance company may agree to increase the cost of the policy.

When the insured person dies, the beneficiary submits the death certificate and claim form to the insurer to file a claim. If the death of the insured is suspicious, the insurer can check whether the death of the insured meets the provisions of the insurance contract.

The payment of the insured sums is sometimes a single payment, or it can be made in several installments in accordance with the contract in order to protect the life of the beneficiary in a certain period.