First Health Insurance

How Life Insurance Works

The world of insurance can get pretty overwhelming, especially if you are thinking about it for the first time in your life. But don’t worry, we are here to make it easy for you and breakdown the whole process.

When it comes to a life insurance policy, it usually has two main components; a death benefit and a premium.

The death benefit is the amount of money that the insurance company promises to the beneficiary that has been named in the policy. The insured could be a parent who named their children as the beneficiaries in their policy. It will be up to the insured to choose the desired death benefit amount that will be based on the beneficiaries’ estimated needs in the future.

Moreover, the premium is the money the policyholder pays for insurance. The insurer is required to pay the death benefit when the insured passes away if the premiums are paid by the policyholder as required. These premiums are usually determined in part by how likely it is that the insurer will be paying the policy’s death benefit based on the insured’s life expectancy. Factors influencing life expectancy include age, gender, medical history, occupational hazards and high-risk hobbies, more information on which can be found

A small part of the premium also goes towards the insurance company’s operating expenses which is why they are usually high, especially on policies that come with larger death benefits and for people at a higher risk.

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