Friday, March 6, 2020

Life Insurance and its Types-Full Details




Life insurance is a socio-economic system that works on cooperation, solidarity, solidarity and interdependence among the participating members by collecting risks and redistributing them in a sound scientific system to reduce the burden of loss for the individual who is harmed.


Also, it is an organized savings method that works to develop an individual’s savings, which is a system similar to an organized savings system, whereby an individual’s way of stopping the payment of installments is linked by the rules and regulations of the organization, which makes these savings less vulnerable, and thus life insurance works to develop and strengthen safety elements and provide long-term and continuous protection This makes them different from saving in banks or banks.



Life insurance is medium or long-term insurance and the length of the insurance ranges between ten years or more than thirty years - and it follows that the necessity for insurance companies to create provisions for reserves called accounting reserves, and these reserves as a whole comprise huge funds available for medium or long-term investment, and therefore The insurance of persons or life insurance is of economic and social importance in economic terms, and the insurance sector, such as banks and banks, has huge amounts of savings from the owners of documents. These funds are available for investment and play an important role in the country's economy where it can Investing document holders' funds for many purposes for development, taking into account the actuarial foundations, insurance principles and investment rules. Investing in these funds results in profits for the policyholders who spend them over the length of the insurance period.

These investments are considered rights of the policyholders and not the rights of shareholders, and therefore the General Authority concerned with supervision of insurance to set laws and legislations that regulate the foundations and employment of the insured's money - and clarify the investment channels that can be invested in and the rates established for each type of investment so that these funds are not subject to the risk of loss .

Life or people insurance works to confront inflation and the shortage of purchasing power of the currency, whereby the profits spent on policyholders compensate the insured for the deficiency that arises from the depreciation of the currency.

The importance of people’s insurance is concentrated in the risk factors that result in the loss of income due to death, or reaching a certain age, or a long or limited period, as is the case in cases of illness, total disability, permanent service termination, or any work that an individual can do.



Life insurance is divided into two main parts, namely, individual life insurance and group life insurance, and each of these two parts has its characteristics, types and advantages, except that each of them performs the same purpose, which is providing insurance protection for the individual in the event of low income or its interruption, in cases of death, disease, disability or old age, as well as Each of them works to create the financial savings that a person needs on special occasions such as marriage, the performance of school fees, and the payment of medical or illness expenses.

Individual life insurance

SubmitIndividual life insurance is divided in terms of insurance coverage into two main parts, the first section is temporary insurance, and the second section is savings insurance.

Temporary life insurance

Its purpose is to compensate the insured in the event of death during the term of the insurance by disbursing the insured amount, and this type of insurance is characterized by a low premium , and this type has no liquidation or recoverable value and is similar to the ruling for insurance against theft incidents or car insurance that ends with the end of the policy term and its duration ranges Insurance in this type is between one and 30 years, or when the insured reaches a certain age, such as 60, 65 or 70 years.

One of the most important types is diminishing temporary insurance, in which insurance begins with a large amount and is ten thousand pounds, then it decreases annually and is at a value of one thousand pounds, to reach zero after ten years (for a ten-year document). The document in this case is the payment of the remaining installments to be paid to the lender in the event of the death of the insured, and there is another type of temporary insurance, which is the increased temporary insurance, where insurance starts with a small amount, but it is five thousand pounds, then it increases annually at a rate of 1000 pounds, for example ... to reach 25 thousand Pounds after 20 years (Lothe A period of twenty years) This type of insurance is suitable for cases where the risk of death when starting insurance is high (after performing a surgery, for example) and the risk decreases with the continuity of the insurance period.

Savings insurance

Savings insurance and the most important documents, including lifelong and mixed insurance. This type of insurance combines insurance and savings and the difference between a life insurance and a mixed insurance that the mixed insurance has a specific period of time and be 10, 20 years. As for life insurance, it will continue throughout the life of the insured, as the amount of the insurance is paid in the event of the death of the insured over him, however if the insured wishes Upon the liquidation of the policy, it is possible to exchange a recoverable value commensurate with the period of the insured and the premiums paid.

As for mixed insurance, the amount of insurance is paid at the end of the insurance period, unless death occurs before the end of the insurance period. The amount of insurance upon death is due. The insurance premium for this type of insurance is relatively high and varies from one insurance company to another .

This type is divided into two important main parts - the first section which is mixed insurance shared in profits and the second section mixed insurance that is not shared in profits - and the difference between these two sections is that the documents issued with the participation in the profits are relatively high premiums because the method of calculating it actuarially depends On the basis of a low interest rate, the company disburses profits to carry the documents in the form of premium insurance amounts - and these higher profits depend on the interest rate that the company was able to achieve in investing the insured's money. The savings insurance is not limited to mixed insurance only with There are many different types - for example: -

(1) Paying part of the insurance amount during the insurance period, not after ten years, and paying the other part of the insurance amount at the end of the insurance period.

(2) Adding additional coverage to the insurance, in addition to the amount of insurance in the event of death, for example, a monthly or annual pension from the date of death until the end of the insurance period, where the original insurance amount is spent ..

And many other types.

Also, there is a special type that defines insurance with a fixed term, whereby the amount of insurance is not spent in this case except at the end of the insurance period, whether the insured is alive or not and if the insured dies before the end of the period, the policy is exempt from paying the installments and this insurance can be the head of the family From creating capital for his children.

Takaful insurance

Takaful insurance does not differ from public life insurance except in terms of application and method of managing life insurance funds. As for the insurance aspect, the coverage is one .. It is the payment of an amount in the event of death or at the end of the insurance period and in this type of insurance it is divided into two main funds:

The first fund: It is called the Takaful Fund where the insured pays an insurance premium, which is known as the Takaful Premium. This section is considered (a donation) from the insured to the Takaful Fund and is not refundable - and from these takaful premiums, death compensation that occurs during the insurance period is paid.

The second fund:

 It is the savings installment which is invested in Sharia and Islamic investment aspects and is paid to the insured at the time of students with a refund value or at the end of the insurance period.

Group insurance:

Collective insurance does not differ from individual insurance in terms of insurance coverage .. Collective insurance contracts pay insurance amounts in cases of death or total or partial permanent disability or when the insured reaches a certain age or after a certain period and the insurance amounts are disbursed either in the form of an immediate amount or a picture Monthly pension.



Collective insurance is the most famous of its kind is that the business owner at his facility or factory concludes a collective insurance contract with an insurance or takaful company for the purpose of providing insurance protection for his worker against the risk of death or disability or the disbursement of the insurance amount as a reward for leaving the service - thus reassuring the worker to the future and future of his family as The business owner is satisfied that his employees perform the work in a manner that is assured for the benefit of all.

Group insurance is characterized by a low cost of insurance for the insured individual, because the employer contributes with the worker in the performance of a large part of the premium.

The types of collective insurance are the same types of individual insurance, which is temporary insurance and savings insurance, but this is done in different forms that are appropriate for the nature of each business owner.



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