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Life Insurance is an insurance policy that pays monetary benefits upon the death of the insured person in the policy. Basically it is an agreement between the insurance company and the insurer wherein the former pays the later with the accepted amount of money as per the agreement in case of death, accident or serious illness. The insurer pays the insurance company a premium as per the agreed in the legal documents of the policy and in return the insurance company pays back to the insurer either lump sum or in installments.
It is not necessary that the insurer is the sole beneficiary of the policy, in most of the cases the relatives of the insurer / business partners of the insurer have certain interests in the policy.
The life insurance policy is based on certain conditions such as death, and accident only. The policy becomes null and void in case of the
suicide of the insured.
The calculations of the rate of interest, life insurance premium to be paid by the insurer are based on a number of factors. These are:
- Age. The life insurance premium depends on the the age of the insurer. More the age of the person, more will be the insurance premium.
- Health. The second factor is the health of the insurer, if the person is suffering from heart disease or any chronic disease the insurance companies are taking more risk by giving the insurance policy to that insurance and since they are taking more risk thus more premiums would be required in that case.
Another factor that is taken into account is the mortality rate of the particular area. In US mortality rate is less or in another words age of death is higher as compared to that in the African countries so the premium is accordingly decided.