Life Insurance Studies
What is Life Insurance?
Life insurance is a type of legal contract between an insurer and a policy holder. In this contract, the insurer commits to paying a certain sum of money under a set of conditions, usually death, dismemberment, or otherwise, terminal harm befalling the policy holder. The payment is made to a beneficiary whom is determined by the policy holder. In exchange for this coverage, the policy holder agrees to make payments to the insurer to hold the coverage, at regular intervals or in larger sums. Many of these policies also cover the costs of funeral expenses and other similar expenses determined by the terms of the contract. However, there are some instances in which life insurance claims may be voided. For instance, if the policy holder fakes his or her own death and is discovered, the premium may not be paid and the policy holder may be prosecuted for fraud. Some other instances in which policies may be void include suicide, drug overdose, or death as a result of a crime. Life insurance quotes for policies are separated into two major categories which are protection policies that are designed to provide money in the event of a specific event and investment policies, which are designed to facilitate the growth of capital by single premiums.
The sale of life insurance has been steadily7 declining for the past two decades. In fact, in 2002 directly after 9/11, the sale of life insurances only temporarily rose by 3 percent. By 2004, another1 percent increase took place, however, by 2006; the decline was in full swing again. However, in response to this, the premium size of the average life insurance policy has increased; by 2006, the average policy size was well over half a million dollars.
It is a statistical fact that most United States families are not monetarily prepared for the death of a loved one. Over fifteen percent of United States husbands do not have life insurance and over 28 percent of the United State’s wives have no life insurance. Over 6 million households, which make up ten percent of families with children under the age of 18, have absolutely no life insurance protection. This means that 10 percent of families have a possibility of losing a parent and not being supported afterwards. Over 22 percent of households that have dependent children will admit that they have daily trouble with living expenses. 26 percent say that in the event of death of one of the primary breadwinner they will only be able to cover several months of expenses.
Most couples in the United States are underinsured. The amount of life insurance coverage on husbands that are insured is just under a quarter of a million. The insurance average amount of insurance coverage on wives is around $150,000. The insured husbands in the United States carry enough life insurance to cover for their income for only around 4 years; for insured wives, it is closer to 5 years. In order to meet the recommendation of having enough life insurance the typical married couple would have to more than double their insurance coverage. The total percentage of married parents that believe their coverage to be inadequate is well over 55 percent.
Overall, the current percentage of people with adequate life insurance is paltry in comparison with the percentage of people that need insurance.