Parties to contract

There are three parties to a life insurance transaction: the insurer, the insured, and the policy owner (policy holder), although the owner and the insured are often the same person. For example, if Joe buys a policy on his own life, he is both the owner and the insured. But if Jane, his wife, buys a policy on Joe's life, she is the owner and he is the insured. The policy owner is the grantee and he or she will be the person who will pay for the policy.

The beneficiary receives policy proceeds upon the insured's death. The owner designates the beneficiary, but the beneficiary is not a party to the policy. The owner may change the beneficiary unless the policy has an irrevocable beneficiary designation. With an irrevocable beneficiary, that beneficiary must agree to any beneficiary changes, policy assignments, or cash value borrowing.

In cases where the policy owner is not the insured (also referred to as the cestui qui vit or CQV), insurance companies have sought to limit policy purchases to those with an "insurable interest" in the CQV. For life insurance policies, close family members and business partners will usually be found to have an insurable interest. The "insurable interest" requirement usually demonstrates that the purchaser will actually suffer some kind of loss if the CQV dies. Such a requirement prevents people from benefiting from the purchase of purely speculative policies on people they expect to die. With no insurable interest requirement, the risk that a purchaser would murder the CQV for insurance proceeds would be great. In at least one case, an insurance company which sold a policy to a purchaser with no insurable interest (who later murdered the CQV for the proceeds), was found liable in court for contributing to the wrongful death of the victim (Liberty National Life v. Weldon, 267 Ala.171 (1957)).


Contract terms

Special provisions may apply, such as suicide clauses wherein the policy becomes null if the insured commits suicide within a specified time (usually two years after the purchase date; some states provide a statutory one-year suicide clause). Any misrepresentations by the insured on the application is also grounds for nullification. Most US states specify that the contestability period cannot be longer than two years; only if the insured dies within this period will the insurer have a legal right to contest the claim and request additional information before deciding to pay or deny the claim.

The face amount on the policy is the initial amount that the policy will pay at the death of the insured or when the policy matures, although the actual death benefit can provide for greater or lesser than the face amount. The policy matures when the insured dies or reaches a specified age (such as 95 years old).

Top 5 Tips To Reduce Your Life Insurance Premium

Life insurance is essential without a doubt but it can be very expensive and as such can be tempting to avoid taking out. However should the worse happen then you could leave your loved ones in a whole lot of trouble financially. Using a little common sense and initiative you can however save your self some money and so make life insurance more affordable. Here are top 5 tips to help you get the cheapest and best deal available.

1. The number one tip when shopping for life insurance is to shop around. By shopping around - especially if you take advantage of the internet - and making comparisons of policies, you will quickly and easily get yourself the best deal possible. Factors to take into consideration when comparing policies includes understanding the details of the policy. These include the amount of premium you will be paying every month; the benefits you get from the policy; and, how much the surrender value of the policy is should you cash it in early. These charges will usually vary from company to company and can vary greatly with some in what you get for your payout.

2. Many companies will allow you to make savings if you choose to pay for your policy on an annual basis or by direct debit straight from your bank account. It is worth checking on this because you could be able to make a saving rather than paying on a weekly or monthly basis.

3. Where possible, instead of taking out several different smaller policies for life insurance take out just one larger one. A large policy is always the best value for money and will sell for less per amount of coverage.

4. If you have held a policy for a number of years then it might be outdated and you could be paying more than you should be for the amount you are covered for. In fact you could be paying around 2 to 3 times more than could you be if you shopped around online and compared newer policies for a better deal.

5. If you quit smoking and drinking, start exercising and lose weight if you need to, you could find that your premiums are a lot lower than those who smoke and drink etc.

Best life insurance policy

Life insurance can be confusing; there are different policies available offering different types of cover and the prices vary from company to company. So how do you know which type of insurance policy is the right one for you? Here is some advice for all those who find life insurance confusing.

The most popular type of life insurance is level term life insurance; this is probably due to the fact that this is the cheapest type of insurance. Quite simply a level term life insurance policy is an affordable way to give yourself and your family peace of mind that should the worse come to the worse then you won’t be left struggling financially.

If you die during the term of the insurance, then your loved one will get paid a lump sum which can help to cover the cost of the mortgage and related bills, the cost of the funeral and day to day living costs. However one point to remember is that this insurance is cheaper because there will only be a payout should you die within the terms of the policy.

If you want life insurance that pays out whether you die or not then whole life cover would be a better choice. With this type of insurance you are guaranteed a payout, however this type of insurance will cost you more than the level term. There are different policies to choose from when taking out this form, with policies to meet all budgets. You are also able to add-in additional cover such as critical illness cover, but of course this will put up your premium even more.

Whichever type of insurance you decide is the right choice for your needs, it is essential that you shop around for the best deal possible. One of the cheapest ways to buy insurance is online, in most cases you are able to make huge savings by comparing what’s on offer by using a comparison site.

ABCs of Life insurance settlement

When you have a life insurance policy, you may think that the only way you can get money from the policy is for you to die! Luckily, there is another way in which you can use the value of your life insurance policy to get cash. If you have a life insurance policy which you no longer need or want, you can sell it to a third party. This third party will give you more cash than what the life insurance company will give you. The third party then becomes the beneficiary of the policy and will make payments on it.

Not everyone is eligible to take part in a life insurance settlement. They usually are done with people who are over sixty five years of age and are expected to live between two and twenty more years. Life settlements are also only done for policies which are worth 100,000 dollars or more. You generally can sell any type of policy such as whole life or universal life insurance.

If you wish to participate in a life insurance settlement, you will need to find a financial advisor. There are a number of different people who can advise you through a life insurance settlement, including attorneys, accountants and financial planners. You will also need to decide which life settlement provider to go through. Some people chose to use brokers which will help them find the best provider to go through, but you should be aware that you will have to pay for this service.

The process for a life insurance settlement is not very complicated, but it does have several steps. First, you will need to consult with your advisor and decide whether you would like to sell your policy. Once you decide to go ahead with the sale, your policy will be submitted in order to have a cash value placed on it. You will need to submit medical information at this time and you might need to have a new physical examination done. If your policy meets all of the criteria, then the providers will start to send you offers. You will want to discuss the different offers with your advisor and make a decision as to which one you should accept. Once you have decided, there will be forms that you will need to fill out. Your advisor will be able to help you with those. The provider will then put a cash payment in escrow and they will send forms to the insurance company requesting that the policy be placed in their name. As soon as the policy is transferred, the money will be released and you will be able to collect your cash.