A contract or an agreement between a life insurance company and a individual to be insured is what is referred to as a life insurance policy. It comes into play when the individual accepts the conditions and terms of the agreement. The only thing required of the insured person is payment of premiums agreed upon with the insurance company. In case the insured dies, death benefits are given by the insurer to the person given as the beneficiary.

There are four roles involved in this, the insuring company, the policy owner, the insured person and the beneficiary. The last three roles can be given to one person. Also, it is possible for several people to be insured under one cover and to have several beneficiaries too.

this agreement mandates that the death benefits be paid to the beneficiary by the insurer upon the death of the policy holder. The payment can only be done if the policy was still active at the time of death. For the policy to remain active, the holder has to maintain premium payment to the insuring company.

The policy comes in three types. One is the the whole life, the second is the term life and the third is the universal life.

Term life insurance is provided on a more fixed basis. This means payments are fixed and made on a fixed routine for a fixed coverage period of time. If the insured person dies within the period the policy is in force, death benefits will be paid.

the fixed premiums of the whole life policy are also required to be paid on a fixed schedule. The difference with this is that the cover period, mostly going up to a hundred years, is guaranteed. The insurance company must pay death benefits even in cases where the holder outlives the policy. From its cash value, this policy can be liquidated.

By choosing the universal life policy, an individual is allowed to pay any premium amount at any time. The maximums for this policy are given by the government. It can be maintained for an unlimited period of time. Universal life policy also has cash value hence it can be liquidated.

When buying life insurance policy, there are a number of steps to follow. The first is to compare quotes from different insurers. After that, comes the part where one is required to fill in an application form. The insurer will lend a hand when filling the form by means of conversation to get the requires information. Then to determine the insured persons mortality risk, the company will have to conduct a thorough medical check up. After waiting for the underwriting, the insurer sends the holder an offer to which they must accept by signing thus enacting the policy.