The concept of life insurance:
Life insurance means insurance that covers material losses arising from the realization of the phenomenon of death or reaching a certain age (life) or both.
Consequently, life insurance is one of the life risks management policies for the individual to face the financial loss arising from the realization of the phenomenon of death for those who depend on them or for the financial loss resulting from reaching a certain age and the inability to earn. It is a means of coping with the lack of income or interruption of income due to death or reaching a certain age or both.
Personal risks to which the individual is exposed:
In his life, the individual faces many dangers related to his person, which, if achieved, lead to the limitation of his ability to work and to obtain an income or to the elimination of his productive ability completely. In general, personal risks can be divided into the following five types:
1. The risk of premature death.
2. The risk of retirement
3. The risk of permanent total disability.
4. The risk of illness and temporary disability.
5. The risk of unemployment.
The dangers of the first three groups lead to a complete and permanent cessation of income, while the dangers of the fourth group lead to a temporary or permanent reduction in income, or it may lead to a temporary interruption only. On another job. It is noted that
The losses that occur as a result of realizing personal risks do not represent material losses only, but consist of material and moral losses at the same time, for example death leads to the loss of the person’s dependents that part of the family’s income allocated for their spending, and this is an economic loss that can be identified, in addition to that loss. The loss of the breadwinner represents a moral loss for his family that cannot be evaluated with money, and on this basis the insurance applicant in life insurance is left free to determine the amount of the insurance, which is often determined in view of his financial ability and his ability to pay the premium.
Characteristics of risks to life:
The risks covered by life insurance policies have several features that distinguish them from other insurance policies. The following are the most important of these features:
1. In the case of covering the risk of death, we find that the document does not cover the death accident itself, but rather covers the date of the accident. The risk of death by its nature is certain to occur in the long term, but the occurrence of death on the date of what happened is a probability that could happen in any time.
2. Life hazards relate to a person’s life or lack of income.
3. The risk of death for any person increases with advancing age, due to the weakness of the human body and its increased exposure to diseases, especially aging diseases. Therefore, the relationship between the probability of death and the age of the person is positive, especially after the person reaches a certain age.
4. The loss resulting from realizing the dangers of life and death is always a total loss.
5. It is difficult to estimate the value of a person, and therefore it is left to the insured person to determine the amount of the insurance according to the ability of the trustee to pay the installments on time.
Features of life insurance documents:
The characteristics of the risks of life are reflected in the insurance policies that cover these risks. The following are the most important features that characterize life insurance documents:
1. Most of the life insurance documents are of the preset value documents, meaning that the insured is obligated to pay the full amount of the insurance to the insured or the beneficiary specified in the contract when the insured accident is realized, knowing that there are some documents In variable installments, with unlimited upfront value, I do not recommend them at all.
2. Life insurance policies are long-term documents that may extend to cover the life of the trustee. That is, life insurance policies are characterized by a long period and therefore they are considered investment documents.
3. As a result of what life insurance policies are characterized by that they are long-term documents, and since the probability of death increases with the increasing of a person’s life and the insured’s desire not to increase the insurance premiums collected from the insured from one year to another, he collects equal premiums from the insured throughout the period Insurance, and therefore these premiums are greater than the risk in the first years and less than the risk in recent years, which entails the necessity to reserve the increase in the premiums of the first years in a special account called the Sports Allowance, and the insurer invests it in order to help it pay the deficit of installments in recent years.
4. The insurance company cannot oblige the insured to continue paying the periodic installments. Stopping the payment of the premiums results in the expiration of the policy, and the insured’s right to obtain the liquidation value as a result of the formation of the sports allowance in life insurance policies or the continuation of the policy with a new low insurance amount.
5. Life insurance policies provide a kind of flexibility in the coverage that they provide to those wishing to buy life insurance in terms of its different types and the insurance protection provided by each of them.
Life insurance documents
A life insurance policy is a contract whereby the insurance company is obligated to pay the insurance amount to the insured, his heirs, or to the beneficiary or beneficiaries specified in the policy, in the event of the death of the insured on his life, or if the insured reaches his life to a specified age in the policy, in exchange for payment The insured has to pay a one-time installment upon contracting or annual installments.
Life insurance policies can be divided according to the benefits that beneficiaries receive from life insurance into three main sections:
The first section: insurance policies whose amounts are paid to the heirs and beneficiaries in the event of the insured’s death, such as temporary insurance policies, life insurance policies.
The second section : insurance policies whose amounts are paid in the event the insured survives, such as pure endowment insurance policies and life payments contracts (pensions).
Section Three : Insurance policies whose amounts are paid in the event of death or life, and they are mixed insurance policies that guarantee payment of the insurance amount to the beneficiaries if the insured dies during the insurance contract period or if the insured personally receives the insurance amount if he is still alive at the end of the insurance period.
Stages of contracting for life insurance:
Life insurance is contracted between the insured and the applicant for insurance protection service – the insured – according to a set of successive stages, which are:
1. Fulfillment of the insurance request.
3. Medical examination.
5. Determine the insurance price.
6. Issuance of an insurance policy.
First: Fulfillment of the insurance request:
The insurance application is the printed form prepared by the insurance companies in order to be completed by the applicant for the insurance protection service, with the aim of obtaining a certain amount of information about the applicant for the insurance protection service, the required insurance and the insurance history of the insured so that the insurance authority can take the appropriate decision regarding the required insurance.
There are two types of insurance claim in life insurance:
1. Requesting life insurance with a medical check-up:
This application includes a set of data, the most important of which are the following:
A- Data related to the insured person regarding his life, such as:
– Name and surname.
– Date and placebirth.
– Profession (normal – hazardous).
– social situation.
– The status of the contractor (the insured) in relation to the insured for his life to ensure the existence of the insurance interest.
B. Data related to insurance regarding:
– Type of insurance.
– The security deposit.
– Duration of insurance.
– The date of the commencement of the insurance.
– Howpay installments.
C. Data related to the life insurance history of the insured in terms of:
previous insurances, valid insurances, or refusal of life insurance by other companies and the reasons for that.
Dr.. Data related to the names of the beneficiaries in case the insured risk is realized. E. Data related to the insured’s relationship with his colleagues, as well as his relationship with members of his family and family.
2. Application for life insurance without a medical examination:
The application for life insurance without a medical
examination includes the same previous data in addition to other data, the aim of which is to help the company accurately judge the health status of the insured over his life, examples of these data include the following: Out or performed surgeries.
B. The insured family’s health history of his life and its importance is limited to hereditary diseases.
C. The impairments afflicted by the insured over his life, if any.
Dr.. The building up of the believer on his life (height – weight).
E. An indication of whether the nature of the insured’s work on his life necessitates his travel and his means of doing so.
And the. The personal habits of the insured. (Does he exercise – does he drink cigarettes)
Second: the query
Inquiries about life insurance are done through the confidential report submitted by both the producer and the agent, assuming that the data contained in the insurance application are verified.
1. Confidential report submitted by the insurance producer:
The insurance product intended by “the person who produces sales for the insurance company, and it may be a person or company that has a license from the state to sell insurance products provided by insurance companies such as an insurance broker, or he may be an employee of the insurance company (insurance agent)”
after satisfying the applicant Insurance The data of the insurance request. This application is delivered to the insurance producer to write his confidential report on the insurance applicant, explaining the following in this report:
a. How was the insurance.
B. The purpose of the insurance.
C. The marital status of the insurance student.
Dr.. The health status of the insurance applicant.
2. The confidential report submitted by the insurance company’s agent:
An insurance company agent is an employee who works for the insurance company and takes a salary from the insurance company, unlike an insurance broker who takes a commission from the insurance applicant, when the insurance agent receives the insurance request and the product report, he prepares a report explaining all the information about the insurance applicant, which may affect the decision The company is about accepting insurance. Examples of this information include:
a. The social status of the insurance student.
B. The financial ability of the insurance applicant to fulfill his obligations before the company.
C. The insurance applicant’s relationship with his relatives and friends.
Dr.. Previous insurances for the applicant.
Third: Medical examination
It is a stage that is limited to the application for life insurance with a medical examination, and the degree of medical examination varies according to the amount of insurance. Therefore, two types of medical report are used:
1. A brief medical report.
2. A full medical report.
The medical examination is carried out by the company’s doctor appointed in the area to which the company’s branch or agency belongs, according to notifications signed by the company’s management, branches or agencies. After conducting the medical examination, the doctor writes a report on the health level of the applicant for his life insurance and notes his acceptance of the insurance.
This stage takes place in the issuance section within the insurance company, where the subscriber studies all the data contained in each of the insurance application and the reports of the producer and the agent, as well as the medical examination report, if any, in order to decide on the decision to accept the insurance. This decision takes one of the following forms:
1. Acceptance of insurance.
2. Acceptance of insurance with the amendment, whether in terms of conditions or prices.
3. Postponement of acceptance of insurance.
4. Refusal of insurance.
Fifth: Determining the insurance price
This stage takes place after the company agrees to accept the insurance. As for life insurance, we find that the price depends mainly on death rates that are affected by the following factors:
1. Age or age.
2. Sex or gender.
3. The geographical area.
5. Marital status.
6. The social level.
7. The cultural level.
8. The health level of the insurance applicant.
The price is also affected by the type of policy and the amount of insurance.
Sixth: Issuance of the insurance policy
The insurance policy is considered the official document indicating a contract in life insurance. The life insurance policy includes several data, the most important of which are:
1. Data related to the insured: the
name of the insurance company, the number of its registration in the commercial register, the number of the license granted to it to practice life insurance from the competent authorities Address of the insured head office, phone number, fax number.
2. Data related to the insured and the insured:
and includes the name of the insured, his insurance status, the name of the insured, his age, his job, and the address that the insured can write to.
3. Data related to the beneficiaries: It
includes the names of the beneficiaries who are entitled to receive the amount of insurance in the event that the insured risk is realized, and their insurance interest for the insured
4. Data related to the insurance:
It includes the type of insurance, the amount of insurance, the date of validity of the insurance, the period of insurance, the insurance premium, the method of paying the insurance premium, and the cases in which the insurer is obligated to pay the insurance amount to the beneficiaries.
5. The general conditions of the
policy : It is a set of conditions that determine the cases in which the insurer is not obligated to pay the insurance amount to the beneficiaries specified in the policy, and the legal rules that must be adhered to when contracting, during the validity of the insurance, or when the insured accident is realized.
People covered by a life insurance policy:
1. The insured:
It is the insurance company – the first party in the insurance contract – and he is the one who provides the insurance protection service and is obligated to pay the insurance amount in the event that the insured accident is verified.
2. The Insured:
It is the second party in the insurance contract and it is the contractor with the insurance company and who is obligated to pay the installments on time to the insured and abides by the conditions mentioned in the insurance policy.
3. The insured: The insured
person whose life is insured, whether life or death, or both.
4. The beneficiary:
It is the person to whom the insured is obligated to pay the insurance amount to him in the event that the insured accident is realized for the insured in its box.
It is noticed that the life insurance rafts can be two parties only, namely the insured and the trustee, such as when a person insures his life for the benefit of himself, in this case the insured has three attributes together and at the same time, the first characteristic of him as a trustee, the second as an insured of his life, and the third as a beneficiary.
There may be in the life insurance policy three parties: the insured, the insured, and the beneficiary, such as a person insuring his life for the benefit of his wife, in this case the husband has two attributes together, which are his description as a trustee and his description as an insured of his life.
In a life insurance policy, there may be four parties: the insured, the insured, the insured, and the beneficiary. For example, a person insures the life of his wife for the benefit of his children.