What is a Life Cycle Policy?
In order for a policyholder to obtain life insurance, one that will benefit his or her significant ones in an event of death or sickness, one has to go through a process. It is short a one, but it entails specific requirements that a future policyholder needs to adhere with.
Insurance policies are essential to make income and protect beneficiaries from financial difficulties, especially after a catastrophic event. Even though insurance policies include property-casualty, health, life insurance and disability, the process to obtain one is similar to each one.
For various purposes or intents, a life cycle policy is also another term for a whole life insurance policy. First and foremost, the process starts with the application process. It is required for insurance policies to have an application as well as payments for the premium in order to become effective. During the process of application, a series of questions are asked from the applicant. This aide the underwriter for the insurance to decide upon the level of risk involved in insuring the person.
The second step on the life cycle policy is having or creating the contract. Such insurance policies can be accepted and approved or denied, with some changed provisions. Policies can be rated as an exceptional risk, may demand a premium that is higher, or may have exclusions. This allows the company to deny claims in certain particular events.
When an untimely event or situation happens, the policyholder has to file a claim. Basic information, such as what happened is necessarily asked by insurance companies as part of their thorough investigation for the claim. The adjusters for the insurance then decide on the validity of the claim, and how much payment is required, based on the contract.
After this, a payout may happen. Claims are paid out by insurance companies to an individual or to a provider of service. This is based on the terms of the insurance policy contract. If the premiums for the policy have been paid by, either an employer or with pretax dollars, then the payout will be deemed taxable. Premiums that were paid with money that is after-tax are also said to be free from tax.
The payout is also the end of a policy’s life cycle. When the insured person passes away, it presumably leaves behind a family or beneficiaries who will gain from the policyholder’s insurance policy.
A policy’s life cycle is also said to be applied to the processing end of a certain life insurance policy. In a nutshell, it starts with a potential application and grows into a life insurance policy that is complete and goes around a repetitive schedule on premium, gets processed and may be even modified as time goes by, and eventually becomes a claim that is payable against a certain insurance company. In such a way, the life cycle term can be applied to almost any undertaking, and not solely on the creation of an insurance policy.
As time goes by, the process of carrying out an insurance policy for a potential policyholder becomes customer-centric. There is much more than just adhering to the life cycle. There is also an exchange of explanations or discussions between insurance representative and client before an application is started.