Life insurance

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Life insurance

An insurance policy that pays a monetary benefit to the insured person's survivors after death.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Life Insurance

An insurance policy where, in exchange for a premium, the insurance company pays a certain benefit to the survivors of the policyholder upon his/her death. Life insurance can help defray costs of the funeral, pay off the estate's debts, and may provide for the survivors' (notably a widow or widower) future. There are two main types of life insurance. Term life insurance lasts only for a certain period of time and pays the death benefit only if the policyholder dies during that time. Whole life insurance lasts as long as the policyholder remains alive and provides a savings component against which the policyholder can borrow under most circumstances.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

Life insurance.

Life insurance is a contract you sign with an insurance company, obligating it to pay a death benefit of a certain value to the beneficiaries you name.

In most cases, the payment is made at the time of your death, but certain policies allow you to take a portion of the death benefit if you are terminally ill and need the money to pay for healthcare.

You may select either term or permanent insurance. With a term policy, you are insured for a specific period of time. When the term ends, you must renew the policy for another term or change your coverage. Otherwise, you're no longer insured. With a permanent policy, you can buy coverage for your lifetime.

You pay an annual premium, typically billed monthly or quarterly, for the coverage. The insurer sets the cost, based on your age, health, lifestyle, and other factors. With a permanent policy, your premium is fixed, but with a term policy it typically increases when you renew your coverage to reflect the fact that you're older.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
* name of the issuer of the life insurance contract sold and the policy number of the contract; and
But because the life insurance contract is one requiring a great deal of reliance on the statements of the insured and/or applicant-owner, honesty -- rather than reliance on the leniency of the courts -- should be the watchword in the contractual process.
Therefore, for purposes of tracking the basis of a life insurance contract, the premiums must be allocated between the additional investment in the contract and a (nonde-ductible) insurance expense.
Any change in the benefits under a life insurance contract or in other terms of the contract (other than automatic increases such as change due to the growth of the cash surrender value, payment of guideline premiums, or changes initiated by the company) that was not reflected in any earlier determination or adjustment will require a redetermination as to whether the definitional guidelines of IRC Section 7702 are still satisfied (see Q 32).
2009-13 (IRB 2009-21, May 26, 2009) answers this question: What income is recognized upon the surrender or sale of the life insurance contracts described in the three situations below?
(A) Any amount received under a life insurance contract on the life of an insured who is a terminally ill individual.
The disadvantages to using a life insurance contract as an investment vehicle is that it requires a long-term commitment.
How are cash distributions received as a result of changes in the benefits of a life insurance contract taxed?
It is a life insurance contract that is intentionally over-funded so that it can provide certain additional benefits for our prospects and clients.
For transfers before the effective date of these regulations, the regulations stated that in the case of a transfer of a life insurance contract to a plan participant before the effective date, the excess FMV of the contract over the consideration received by the plan is includible in the income of the participant receiving the contract.

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