This is an insurance policy which provides protection
against morbidity or ill health risk. It protects for more wanting to have
expenses covered at reasonable costs. This covers medical expenses insurance
and disability income insurance.
The most popular act known as Mc-Carren Ferguson act of 1945
regulate the life insurance companies. This is the primacy of the state over
Federal commissions that supervises and examines the life insurance companies
under a coordinated system. Regulation focuses basically on matters relating to
insurance premiums, insurance commission charges, investment portfolio holding,
sales practices and so on. Regulatory actions were taken against deceptive
sales practices if found on investigation. In order to make life insurance
regulation effective, various regulatory measures were desired to promote life
insurance guaranteed funds to compensate policyholders in the event of failure.
Life insurance companies because of their long-term nature
of liabilities resulting from future policyholder’s claims, they are able to
invest in assets that have longer term maturity characteristics. These include
corporate securities like bonds, stocks, mortgages and also in government
securities and policy loans. Looking of the liabilities side, life insurance
companies have a major capital reflecting policy reserves covering future
expected liabilities, death benefit, maturing endowment policies as well as
cash surrender values.
The more important types of annuities can be described very briefly.
A single premium annuity is purchased by the payment of one lump sun amount. The
payments being at stipulated a age for the life of the annuitant. But instalment
payment annuities call for premiums periodically over a period of years to the
date of retirement, after which the annuity received a fixed income for continuing
his life. A life insurance annuity is purchased by the proceeds of life
insurance policy that are distributed as an annuity in lieu of a lump sum
payment. The life annuity is simply a means of assuring a certain income, which
cannot be outlived. Since a part of the principal in addition to the interest
earned, is returned each year, the return to the annuity is larger than that
which would be produced by interest income alone. Most life insurance policies provide
for this type of settlement option.
