Technical Life Insurance Information

Knowing the technical details of Life Insurance is important when choosing a plan or giving advice.  Alliance Insurance Services believes that any person involved in any aspect of the Life Insurance management process should learn and fully understand the different types of policies that are available.  The technical details shown here are provided by the Office of the Commissioner of Insurance and are provided as a learning and information tool only.  These extracts are from the IIQE General Insurance Examination Study Notes, for full details or to download the full study notes please visit:

http://www.peak.vtc.edu.hk

Definition of Life Insurance
“Life insurance provides a sum of money if the person who is insured dies whilst the policy is in effect.”
Anybody who has some knowledge about life insurance will be tempted to say “yes, but…”.  In other words, surely this is to brief an explanation for a financial service that provides a very sophisticated range of savings and investment products, as well as mere compensation for death.
The definition captures the original, basic intention of life insurance: i.e. to provide for one’s family and perhaps others in the event of death, especially premature death.  Originally, policies were for short periods of time, covering temporary risk situations, such as sea voyages.  As life insurance became more established, it was realized what a useful tool it was for a number of situations, which would include:

1. Temporary needs/threats:  The original purpose of life insurance remains an important element in life insurance and estate planning, as things like children’s education, etc. occupy responsible people’s thoughts.
2. Savings:  Providing for one’s family and oneself, as a long-term exercise, becomes more and more relevant as society evolves from a tribal, clan, family orientated community to relatively affluent individual independence.
3. Investment:  Investment is a process of exchanging current resources for expected benefits.  The accumulation of wealth and safeguarding it from the ravages of inflation become realistic goals as living standards rise.
4. Retirement:  Provision for one’s own later years becomes increasingly necessary, especially in a changing cultural a social environment.