Life insurance takes human life as the subject matter of insurance. In life insurance, insurance that uses both "life" and "death" as insurance accidents is called insurance.

Life insurance is a kind of personal insurance that takes human life as the insurance subject and life and death as the insured accidents. When an insured accident occurs in the life of the insured, the insurance company pays the insurance premium. The original life insurance was to protect the financial burden that may be caused by unpredictable death. Later, a savings component was introduced into life insurance, so for those who are still alive when the insurance period expires, the insurance company will also pay the agreed insurance. gold. Life insurance is a social security system and an insurance business that takes human life and body as the insurance object. For everyone, death, old age, disability, disease, etc. are dangers in life, which we call personal dangers.

From the perspective of society as a whole, there will always be some people who are injured accidentally, there will always be some people who are sick, and various dangers threaten people's lives at any time, so we must adopt a method to deal with personal injuries. The dangerous method is to provide certain material financial help to people who are in personal danger and their families. Life insurance falls into this method. It is characterized by entering into insurance contracts, paying insurance premiums, and providing protection to those who participate in the insurance, so as to enhance the ability to withstand risks, prepare family financial plans, build a psychological defense line for you and your family, construct a world of love, and create A bright future. Life insurance is a noble cause that brings warmth to thousands of households. As an investment method with dual functions of insurance and savings, life insurance is increasingly understood, accepted and loved by people. Life insurance can help people solve various risk protection problems such as pensions, medical care, and accidental injuries. People can prepare for old age when they are young, prepare for tomorrow today, and prepare the previous generation for the next generation. In this way, when an accident occurs, the family can receive living security, receive a pension when they are old, and receive financial security if they are sick and hospitalized.

Based on the types of life insurance, it can be divided into:

1. Term life insurance

Term life insurance is based on the insured’s insurance during the period specified in the policy. In the event of death, the deceased beneficiary has the right to receive the insurance benefit. If the insured does not die during the policy period, the insurer does not need to pay the insurance benefit and will not return the insurance premium. This is referred to as "term life insurance". This insurance mostly provides short-term benefits to the insured. Provide protection for those engaged in more dangerous jobs within the company.

2. Whole life insurance

Whole life insurance is a kind of irregular death insurance, referred to as "whole life insurance". Insurance liability extends from the time the insurance contract takes effect until the death of the insured. Since death is inevitable, the insurance premium of whole life insurance must eventually be paid to the insured. Since whole life insurance has a long insurance period, its premium rate is higher than that of term insurance, and it also has a savings function.

3. Survival insurance

Survival insurance means that the insured must survive until the expiration of the insurance period stipulated in the policy before he can receive the insurance money. If the insured dies during the insurance period, he cannot claim to recover the insurance money, nor can he recover the paid insurance premiums.

4. Life and death insurance

A combination of term life insurance and survival insurance. Life and death insurance means that if the insured dies during the period stipulated in the insurance contract, the deceased beneficiary will receive the death insurance benefit stipulated in the insurance contract, and the insured continues to survive until the expiration of the insurance period stipulated in the insurance contract. The policyholder will receive the life insurance policy maturity payment as stipulated in the insurance contract. This type of insurance is the most common commercial life insurance on the market today.

5. Pension insurance

Pension insurance is a combination of survival insurance and death insurance. It is a special form of life and death insurance. Regardless of whether the insured dies during the insurance period or survives until the expiration of the insurance period, the insured can receive insurance benefits, which can eliminate the financial pressure caused by the death of the insured for the family and enable the insured to receive benefits at the end of the insurance period. A sum of money for retirement.

Life insurance should also include health insurance. There are two main categories of health insurance coverage:

One is medical expenses incurred due to illness or accident.

The second is other losses caused by illness or accidental injury.

The operation of life insurance

There are four legal persons in life insurance transactions: the insurer, the insured, the policy holder and the beneficiary. The insurer is usually an insurance company. The company, policyholder and insured are often the same person.

For example, if Zhang San buys life insurance, he is the policy holder and the insured; but if Zhang San’s wife Li Si buys life insurance for Zhang San with Zhang San’s consent, Li Si is the policy holder and Zhang San is the insured. . The insurer and the policy holder constitute the parties to a life insurance contract, and the insured is a related party to the insurance contract. Another important relationship person is the beneficiary. The beneficiary is the person who receives the insurance money due to the death of the insured. The beneficiary is not a party to the insurance contract and cannot decide for himself whether he will benefit. Instead, he is selected by the insured. If the policyholder wants to change or designate a beneficiary, he must obtain the consent of the insured, and the beneficiary must accept this change.

A life insurance contract, like other insurance contracts, is a legal contract that specifies the period and conditions for bearing risks. Some restrictions including suicide clauses were agreed upon in the liability exemption. The suicide clause stipulates that if the insured commits suicide within a certain period of time (usually two years) after taking out the policy, the insurance company will not be liable for benefits. Most life insurance contracts have an observation period (usually two years). If the insured dies within this period, the insurer has a legal right to decide whether to pay the insurance benefit or refund the insurance premium.

When the insured dies or reaches the age specified in the insurance contract, the insurer pays the insurance benefit. One of the reasons people buy life insurance is to protect the beneficiary from financial hardship due to the death of the insured. Insurance proceeds can pay for funeral and other death expenses, and can replace the deceased's salary with investment income. Another reason to buy life insurance is that it can be used for family estate planning. Protect your post-retirement life from the impact of reduced income due to retirement.

The pricing policy of the insurance company is related to the scheduled amount of insurance benefits, administrative expenses and scheduled profits. The amount of scheduled insurance benefits is determined by referring to the life table through insurance statistics. The mathematical methods used in insurance statistics include probability theory and mathematical statistics. A life table is a table that displays the average remaining life (average remaining life span). Typically, life tables only consider the age and gender of the insured.

Insurance companies collect insurance premiums from policyholders or insureds, and use the sum of principal and interest of the funds in a certain period of time to determine the amount of insurance benefits. Therefore, life insurance rates are very sensitive to the age of the insured, because the insurance company believes that the insurance premiums paid by older people are too short for investment.

Because harmful habits may have a negative impact on the operating results of the insurance company, the insurance company will conduct a survival investigation on the insured to the maximum extent permitted by the policy. Insurers will ask and record the insured's lifestyle and health status in as much detail as possible before underwriting. Under certain conditions, such as if the insurance amount is very high or if it is suspected that the disclosure is concealed, the insurer will further investigate. In many cases, the insurer obtains permitted information from the insured's physician.

The law does not require life insurance coverage for everyone. Insurance companies determine for themselves who is eligible for coverage and who is denied coverage based on their own health and lifestyle reasons. However, if the risk caused by an unhealthy lifestyle or substandard body can be estimated, the insurance company may agree to increase the insurance premium.

When the insured dies, the beneficiary submits the death certificate and claim form to the insurer to file a claim. If the death of the insured is suspicious, the insurer may investigate whether the death of the insured complies with the provisions of the insurance contract.

The payment of insurance benefits is sometimes a one-time payment, or it can be paid in installments according to the contract to protect the beneficiary's life for a certain period of time.

Types of life insurance

Please refer to the insurance business system table

Life insurance can be divided into risk protection life insurance and investment and financial management life insurance.

Risk protection life insurance

Risk protection life insurance focuses on protecting the risk of a person's survival or death. Risk protection life insurance can be divided into term death life insurance, whole life death life insurance, endowment insurance, and annuity insurance.

Term death life insurance

Term death life insurance provides death protection during a specific period. The insurance period is often 1 year, 5 years, 10 years, 20 years or until the insured reaches a specified age. The insurance does not accumulate cash value, so term death insurance is generally considered "pure" insurance without any investment features.

There are three key factors to consider when purchasing term death life insurance: amount of insurance, premium and length of term. There are many types of term death policies sold on the insurance market that are many different combinations of these three parameters. Term death life insurance is generally cheap and suitable for people with lower incomes or those who undertake a dangerous job in the short term.

Permanent death life insurance

Permanent death life insurance provides the insured with lifelong death protection. The insurance period generally ends when the insured reaches the age of 100. No matter when the insured dies before turning 100, the beneficiary will receive an insurance benefit. If the insured lives to the age of 100, the insurance company will pay the insured a sum of insurance money. Since the insured has to pay the insurance premium when the insured dies, whole life death insurance has a saving nature and its price is relatively high among insurances. The policy has a cash value, and some insurance companies offer policy loans on some lines.

End-end insurance

End-end insurance is also called "life and death insurance" or "savings insurance", regardless of whether the insured dies during the insurance period or the insured expires. If you survive, the insurance company will pay the insurance premium. This policy is the most expensive form of life insurance.

End-end insurance can provide an old-age retirement fund, can provide living expenses for survivors, and in special circumstances can be used as an investment tool, a semi-forced savings tool, or as collateral in personal loans.

Annuity insurance

In annuity insurance, the insurer pays a certain amount of insurance money according to a certain period during the agreed period or the life of the insured. The main purpose of annuity insurance is to ensure the income of the annuitant. Pure annuity insurance generally does not protect the insured's death risk, but only provides protection for the insured's loss of income due to longevity.

Investment and financial management life insurance

Investment and financial management life insurance products focus on investment and financial management, and the insured can also obtain the functions of traditional life insurance. This type of insurance can be divided into participating insurance, investment-linked insurance and universal life insurance.

Participating insurance

In addition to obtaining insurance protection, participating insurance policyholders can obtain dividends from the insurance company, that is, they can share operating results with the insurance company. This insurance is the primary insurance against inflation and interest rate changes.

The dividends of participating insurance mainly come from the "three differences": interest spread, dead spread and fee difference. The interest rate spread is the income or loss caused by the difference between the insurance company's actual investment rate of return and the scheduled investment rate of return; the death spread is the income or loss caused by the difference between the scheduled mortality rate and the actual mortality rate; the fee spread is the income or loss caused by the difference between the insurance company's scheduled expense rate and the actual mortality rate. Gains or losses resulting from differences in expense rates. Generally speaking, in a regulated insurance market, there is not much difference in dead spreads and fee spreads between insurance companies, and dividends mainly come from spread income.

Investment-linked insurance

In addition to obtaining insurance protection, investment-linked insurance policyholders also have a certain asset value in at least one investment account. After the insurance company deducts the death risk insurance premium from the investment-linked insurance, the remaining portion is directly transferred to the customer's investment account. The insurance company invests according to the investment method and investment channel selected by the customer in advance, and the investment income directly affects the customer's pension amount. .

Universal life insurance

Universal life insurance is flexible, cost-transparent, and investable. During the insurance period, the insurance premium can change according to the policy holder's needs and economic conditions. The policy holder can even temporarily postpone or stop paying the insurance premium, thereby changing the insurance amount. Universal life insurance links the cash value of the insurance policy with investment income. The insurance company determines the distribution of investment income based on variables such as the current payment amount, current expenses, and current cash value of the insurance policy, and reports it in writing to all policyholders.

Common standard clauses in life insurance

Grace period clauses

Most life insurance contracts are long-term contracts, and the payment period may be as long as decades. During the payment period, there are often situations where payment cannot be made on time, such as business trips, forgetting, temporary financial constraints, etc. In order to prevent the insurance policy from invalidating easily, the insurance company usually gives the policy holder a certain grace period to pay the renewal premium. If an insured accident occurs during the grace period, the insurance company will still pay the insurance money even if the policy holder fails to pay the insurance premium. If the grace period is exceeded and the premium is still not paid, if the insurance premium is protected by the automatic advance payment clause, it will enter the advance payment period; if there is no protection, it will enter the expiration period.

The grace period stipulated in the Insurance Law of the People's Republic of China is 2 months.

Terms of automatic advance payment of insurance premium

If the grace period is exceeded and the insurance premium is still not paid, if the cash value of the insurance policy is sufficient to advance the insurance premium and interest, the insurer will automatically advance the payment premium unless the policyholder objects to this provision in writing. The insurance premium is paid in advance until the accumulated loan principal and interest reaches the cash value of the insurance policy, at which time the insurance policy will enter its expiry date. The "Insurance Law of the People's Republic of China" does not mandate this clause, but many insurance companies provide this clause, and this clause is not a statutory clause in many countries.

Reinstatement Clause

The reinstatement clause stipulates that if a life insurance policy ceases to be effective due to non-payment of premiums, the policyholder may apply to pay the premium within two years to reinstate the policy. . However, failure caused by other reasons is not protected by the reinstatement clause.

No loss of value clause

This clause stipulates that even if the policy lapses, ownership of the cash value of the policy remains with the policyholder.

Age misstatement clause

Given that age is an important factor affecting life insurance rates, this clause stipulates that when the insurer discovers that the insured’s age is misreported, it will be adjusted based on the true age. Insurance amount. If the age misstatement exceeds the insurance age range stipulated by the insurance company, the insurance contract will be invalid and the insurance premium will be refunded by the insurance company. Misstatement of age does not fall within the incontestability clause. The "Insurance Law of the People's Republic of China" does not deal with age errors, and some insurance companies have sporadic provisions regarding age misreporting in their clauses.

Beneficiary Clauses

Please refer to the operation section of life insurance in this article

Please refer to the study of legal issues of insurance beneficiaries

This clause It also stipulates that if no beneficiary is designated and the insured does not designate a beneficiary in a will, the legal heir of the insured shall be the beneficiary. If the beneficiary dies before the insured, the insurance money will be transferred back to the insured, who can use it for other purposes.

Suicide clause

Generally, if the insured commits suicide within two years after the insurance policy comes into effect (or is reinstated), regardless of whether he is mentally normal or not, the insurance company will not pay the insurance benefit. Only the premium paid is paid to the beneficiary. The "Insurance Law of the People's Republic of China" stipulates that the cash value shall be returned for suicide.

Incontestability Clause

Two years after the date when the insurance policy comes into effect (or is reinstated), the insurer shall not be liable for any intentional concealment, negligence, or negligence of the policy holder or the insured when taking out the insurance. Reasons such as omissions and false statements negate the validity of the insurance contract, except where the policyholder defaults on paying the insurance premium. This internationally accepted clause generally focuses on protecting the interests of the insured or beneficiary, but the Insurance Law of the People's Republic of China focuses on protecting the interests of the insurer. Its description is: "When entering into an insurance contract, the insurer shall The policy holder shall explain the terms of the insurance contract and may make inquiries about the subject matter of the insurance or the insured's relevant circumstances. If the policy holder intentionally conceals the facts and fails to perform the obligation to truthfully inform, or fails to perform the obligation to truthfully inform due to negligence, If it is enough to influence the insurer's decision to agree to underwrite or increase the insurance premium, the insurer has the right to terminate the insurance contract. If the policy holder intentionally fails to fulfill its obligation to truthfully disclose the accident, the insurer will not be liable for compensation or insurance benefits for the insured accident that occurred before the insurance contract was terminated. If the policyholder fails to fulfill the obligation of truthful disclosure due to negligence, which has a serious impact on the occurrence of the insured event, the insurer shall not be liable for compensation or payment of insurance premiums for the insured event that occurred before the insurance contract was terminated. , but the insurance premium can be refunded. ”

See the principle of utmost good faith

Policy loan provisions

Life insurance policies have a cash value, which is generally stated in the policy. After two years, the policy can be mortgaged to the insurance company to apply for a loan. In practice, the general loan limit does not exceed a certain proportion of the policy’s cash value, such as 80%. When the sum of the loan principal and interest reaches the cash value of the policy, the policyholder should repay the money on the date notified by the insurer, otherwise the policy will become invalid. If the amount has not been repaid when collecting the insurance benefits, the insurance benefits will be paid after deducting this amount. The term of policy loans is generally 6 months. They are short in time, small in amount, and large in number. Generally, the net loan income is lower than the insurance company’s investment income, so this clause is a preferential behavior from the insurance company to the policy holder. The "Insurance Law of the People's Republic of China" does not stipulate this clause, but some clauses of some insurance companies stipulate this clause.

Double benefit clause for accidental death

If the insured dies before the specified age (60 or 65 years old), the proximate cause of the death of the insured is an accident, and in the accident If the person dies within 90 days of the accident, the insurance company will pay double or triple the insurance benefit to compensate for the mental shock and economic losses suffered by his family. The "Insurance Law of the People's Republic of China" does not stipulate this clause, but some clauses of some insurance companies stipulate this clause.

Policy transfer clause

The insurance policy has a cash value and can be used as a financial asset and can be transferred under certain conditions (without infringing on the vested rights of the beneficiary, etc.). There are two situations of transfer. One is to completely transfer the ownership of the policy and transfer some unfulfilled obligations; the other is to use the policy as a credit guarantee or loan collateral for the insured. When transferring an insurance policy, the insurance company must be notified in writing, otherwise the transfer will not be established. The Insurance Law of the People's Republic of China does not stipulate this clause, and there is no clause stipulating this clause.

Optional terms for dividends and insurance premiums

There are many ways to dispose of dividends from participating insurance, and you can choose from them. They are: receiving cash, accumulating interest, paying renewal premiums, automatically increasing the insured amount, automatically purchasing term death insurance, incorporating reserves to mature early, etc. The insurance premium optional clause stipulates that the insured or beneficiary can choose from the following methods when receiving insurance benefits: income interest (the beneficiary receives the principal after the death of the recipient), regular income (annuity), and fixed income (annuity), lifetime income (annuity).

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