6.Discuss Insurance of persons
Life insurance
Insurance against accident
Insurance of persons refers to insurance policies that protect individuals from financial loss due to specific events or circumstances. There are various types of insurance of persons available, with two common examples being life insurance and insurance against accidents.
1. Life Insurance:
Life insurance provides financial protection to the policyholder's beneficiaries upon their death. The policyholder pays regular premiums, and in return, the insurance company provides a death benefit to the designated beneficiaries upon the policyholder's death. It ensures that the policyholder's loved ones are financially secure once the policyholder is no longer there to provide for them.
Life insurance can be further classified into two main types:
- Term Life Insurance: This type of life insurance provides coverage for a specific period, such as 10, 20, or 30 years. If the policyholder dies during the term, the beneficiaries receive the death benefit. However, if the policyholder survives the term, no benefits are paid.
- Whole Life Insurance: Whole life insurance provides coverage for the entire lifetime of the policyholder. Premiums are generally higher than term insurance but allow for the accumulation of cash value over time. The policyholder can also borrow against the cash value or surrender the policy for its accumulated value.
2. Insurance Against Accident:
Insurance against accidents covers the policyholder against various types of accidents leading to disability, injury, or death. It provides financial assistance to handle medical expenses, loss of income, or other related costs following an accident. This insurance can be purchased by individuals, families, or employers to protect against unexpected events.
Accident insurance includes coverage for events such as:
- Accidental Death and Dismemberment (AD&D): This coverage pays a death benefit or provides compensation if the policyholder suffers the loss of a limb or suffers permanent disabilities due to an accident.
- Disability Insurance: Disability insurance provides income replacement if the policyholder becomes unable to work due to an accident. It ensures a regular income during the recovery period and helps to cover medical expenses and living costs.
- Medical Expense Insurance: This type of insurance covers medical expenses resulting from accidents. It includes coverage for hospitalization, surgeries, medications, rehabilitation, and other related costs.
Insurance against accidents is crucial as it provides financial protection and peace of mind in case of unforeseen events. It helps individuals and their families cope with the financial burden that may arise from accidents, ensuring they have the necessary resources to recover and rebuild their lives.