Terms Beginning With 'l'

Life insurance

  • January 07, 2020
  • Team Kalkine

What is life insurance? 

Life insurance is a financial protection plan to safeguard a family's financial future when the policyholder is no longer in a situation to support. During the unfortunate event, the nominee mentioned in the policy by the policyholder receives the economic benefit. It acts as a defence in protecting the family and loved ones. 

The insurance policy also helps in managing finance in case

During accidental deaths, the dependents have to continue taking care of the liabilities such as rent, loan, fees for education. Amount from the insurance policy helps the beneficiaries with maintaining the lifestyle ahead. 

In today's fast-moving life, life is uncertain, and ill-fated circumstances take a toll on both physical and financial health of the family. Life insurance, in a way, provides financial peace of mind to the family.

Life insurance gives assurance that after the incapability of the policyholder to provide financial support, the family members continue with the similar lifestyle without feeling the burden.

These policies usually provide lump sum money to the beneficiary. It allows the nominee to continue with their financial goals and acts as a valued asset. 

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How does life insurance work?

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In order to benefit the most from life insurance, experts advise availing the policy at the earliest stage of life. It is a contract where the policyholder pays a premium to the insurance company either as a lump sum or on a regular/monthly basis. 

In the case of a circumstance such as the death of the policyholder within the term period, the insurance company pays to the family or the nominee of the policy the amount in the contract, i.e. life insurance policy. 

Life insurance policy is given to the person earning a stable income through his skill or talent. If a person earning income through other mediums such as property rent or interest from fixed deposits, then the person will not be eligible to avail the policy.

Before giving the term policy, the insurance company does the complete health and medical check-up of the person. Many companies do not provide insurance if the person has existing severe health problems and diseases such as Cancer, but few have started covering critical illness in their package.

Life insurance policies typically provide higher income coverage compared to the income of the policyholder, and the range reduces as the age increases. Hence the insurance agents suggest taking the plan as early as possible. 

Policyholders can choose the policy and its terms based on the need and the goal. Many companies provide various types of life insurance. 

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What are the benefits of life insurance? 

Life insurance offers various advantages apart from the financial ones. 

Protection: investing in the life term policies can provide a secure future to the family. In case of an unfortunate event, the beneficiaries would receive a sum assured plus any bonuses from the insurance company.

Life insurance not just helps the young kids who are dependent upon the policyholder, but it could also be used to assist the retired parents who may not have any source of income anymore. The beneficiaries can use the funds the way they wish. 

As per the government of Australia, more than 70 per cent life insurance is purchased through Super funds. Super funds include much more than life insurance benefits to the policyholder such as Disability (total or permanent disability) and income protection. The policy then helps cover any current or future expenses of the person.

Tax Benefits: In many countries, life insurance provides tax benefits to policyholders. Especially for the salaried individual, it is the best way to reduce liability. The premiums paid towards term policies are tax-exempt. 

Though in Australia, the premiums are only tax-deductible if they are connected to earning an assessable income.

Rehabilitation and living costs: This policy pays a lump sum amount to the policyholder to help with rehabilitation and living costs. Total and permanent disability (TPD) insurance provides various benefits if the person becomes seriously ill and disabled and is unlikely to work again.

Trauma coverage: Trauma insurance covers the person when diagnosed with a critical illness. A lump sum amount is given to the policyholder after getting diagnosed with a severe medical condition.

Income replacement: Income protection insurance is also called salary continuance cover. The policyholder enjoys a regular income for a specific period if they are unable to work due to temporary disability or illness.

Income protection insurance policy often uses a benefit amount which is the amount it pays per month. The amount can be set automatically, or the person can choose on its own. 

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How to decide on the life cover? 

The person who wishes to avail the life cover needs to consider the financial needs of the family in future as every household as a different requirement. It also depends on circumstances like which stage of life are you in; type of insurance under consideration; financial obligations for a family and so on.

The government in Australia suggests everyone check if they have existing life insurance through super. Super funds provide life insurance as default service with premium cheaper than buying it directly as they buy insurance policies in bulk. In case an uptick is required in your insurance cover, it’s easily done through Super funds, only answers to a few medical questions and a medical checkup is needed.

Individuals can also avail life insurances from insurance brokers, financial advisors or directly from the insurance company. 

Apart from the single insurance, life cover can be clubbed with its own or other insurance such as trauma, TPD and income protection insurance. But if the insurance is clubbed then at the time of claiming a certain amount, the cover from others may reduce. 

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How to pay life insurance premiums? 

Premiums are usually recalculated during policy renewal. It increases each year as there is a higher chance of claiming the insurance policy as the age increases.

Conclusion

There are various companies offering Life insurance. The one buying should do its research such and decide on the right product from the right company. Research may include a few of the points mentioned below and invest wisely

  • What all is covered in the policy
  • What all information you will need to give to an insurer
  • Details about the premium amount, method of payment
  • Waiting period before a claim can be made
  • Process to claim

An Insurance policy which provides compensation to the nominee in occurrence of an accident or death. It is usually light on the pocket and perceived as an added benefit to an existing

Compensation to the nominee in case of an accidental death insurance policy. It is paid exclusive to the conventional benefits shared if the insurer died from natural causes.

What is Data Mining? Data mining is a process that facilitates the extraction of relevant information from a vast dataset. The process helps to discover a new, accurate and useful pattern in the data to derive helpful pattern in data and relevant information from the dataset for organization or individual who requires it. Key Features of data mining include: Based on the trend and behaviour analysis, data mining helps to predict pattern automatically. Predicts the possible outcome. Helps to create decision-oriented information. Focuses on large datasets and databases for analysis. Clustering based on findings and a visually documented group of facts that were earlier hidden. How does data mining work? The first step of the data mining process includes the collection of data and loading it into the data warehouse. In the next step, the data is stored and managed on cloud or in-house servers. Business analyst, data miners, IT professionals or the management team then extracts these data from the sources and accordingly access and determine the way they want to organize the data. The application software performs data sorting based on user’s result. In the last step, the user presents the data in the presentable format, which could be in the form of a graph or table.         Image Source: © Kalkine Group 2020 What is the process of data mining? Multiple processes are involved in the implementation of data mining before mining happens. These processes include: Business Research: Before we begin the process of data mining, we must have a complete understanding of the business problem, business objectives, the resources available plus the existing scenario to meet these requirements. Having a fair knowledge of these topics would help to create a detailed data mining plan that meets the goals set up by the business. Data Quality Checks: Once we have all the data collected, we must check the data so that there are no blockages in the data integration process. The quality assurance helps to detect any core irregularities in the data like missing data interpolation. Data Cleaning: A vital process, data cleaning costumes a considerable amount of time in the selection, formatting, and anonymization of data. Data Transformation: Once data cleaning completes, the next process involves data transformation. It comprises of five stages comprising, data smoothing, data summary, data generalization, data normalization and data attribute construction. Data Modelling: In this process, several mathematical models are implemented in the dataset. What are the techniques of data mining? Association: Association (or the relation technique) is the most used data mining technique. In this technique, the transaction and the relationship between the items are used to discover a pattern. Association is used for market basket analysis which is done to identify all those products which customer buy together. An example of this is a department store, where we find those goods close to each other, which the customers generally buy together, like bread, butter, jam, eggs. Clustering: Clustering technique involves the creation of a meaningful object with common characteristics. An example of this is the placement of books in the library in a way that a similar category of books is there on the same shelf. Classification: As the name suggests, the classification technique helps the user to classify and variable in the dataset into pre-defined groups and classes. It uses linear programming, statistics, decision tree and artificial neural networks. Through the classification technique, we can develop software that can be modelled so that data can be classified into different classes. Prediction: Prediction techniques help to identify the dependent and the independent variables. Based on the past sales data, a business can use this technique to identify how the business would do in the future. It can help the user to determine whether the business would make a profit or not. Sequential Pattern: In this technique, the transaction data is used and though this data, the user identifies similar trends, pattern, and events over a period. An example is the historical sales data which a department store pulls out to identify the items in the store which customer purchases together at different times of the year. Applications of data mining Data mining techniques find their applications across a broad range of industries. Some of the applications are listed below: Healthcare Education Customer Relationship Management Manufacturing Market Basket Analysis Finance and Banking Insurance Fraud Detection Monitoring Pattern Classification Data Mining Tools Data mining aims to find out the hidden, valid and all possible patterns in a large dataset. In this process, there are several tools available in the market that helps in data mining. Below is a list of ten of the most widely used data mining tools: SAS Data mining Teradata R-Programing Board Dundas Inetsoft H3O Qlik RapidMiner Oracle BI

Earned Premium typically reflects the premium collected by the insurance agency during the tenure of the policy that has expired to bear the risk of compensating the policyholder during the insured period. Insurance companies typically recognise the associated premium payment they take from the policyholder unearned till the expiry.

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