If you’re a homeowner in the United Kingdom, you’re probably already familiar with an insurance policy. It’s a legal contract between you and an insurance company that determine how much money the insurance company is allowed to pay out if you or one of your family members needs to be financially compensated for damage or loss. The insurance policy will also specify what happens if the insured person dies during the term of the contract. Most policies stipulate that the contract should be in force for a defined period of time, typically one year, but it can be renewed annually as well.
When most people hear the words “Workers Compensation,” they tend to think of a life insurance policy, or some kind of automobile insurance policy. Certainly many insurance policies are available, covering both land and water. However, there are insurance contracts that cover a wide range of different topics, from travel insurance to homeowners insurance. They’re commonly known as term policies, because the term actually refers to the length of time the contract is active.
An insurance policy covers two parties-the insured and the insurer. In insurance terms, the insured is referred to as the principal. The principal pays into an insurance policy, with each pay period beginning with the first day the contract is in force. In return for an initial premium, called the premium, the insured promises to repay loss resulting from perils accurately stated in the contract language. Some states allow for endorsements, or add-on endorsements, to add additional coverage.
Every insurance policy has a primary limit. This is the maximum amount of money the insured will be compensated for. Usually, this limit is set by the insurance company, and it’s stated in the contract. However, there can be an unlimited number of endorsements or add-on endorsements allowed, if the principal agrees. The primary limit on insurance policies is usually the amount of death benefits.
Insurance policy forms often include statements at the beginning and end of the agreement. Standard forms also include the premium and endorsements. The premium is determined by a mathematical formula, based on the age of the insured and his or her expected life span. Some insurers allow multiple endorsements, but these are rare.
One of the main features of life insurance policies is that they provide a cash value, which means the amount of the premiums paid out must be repaid. As long as the premiums are repaid, the policy owner is protected from death. It is important to note, however, that the insurance company and the insured have to reach an agreement regarding the repayment of the premium. If the premium cannot be collected, then the policy holder loses all of the cash value of the contract.