Name of Professor
Life insurance is a contract between the insurance policy holder and an assured. The insurer has to promise the insurance policy holder a designated amount payment in exchange for a premium. The payment can be triggered by the events such as the critical illness or death of the policyholder (Gerber 2005).
In order to transfer a 75% of his risk, Bill should consider taking a term life insurance, which is the most basic type of life insurance, the policyholders of this insurance provide cover with no saving and it is the cheapest (Gerber 2005). Guaranteed Future Insurability clause would be useful to Bill since there may be unexpected changes to health, the financial status may change, and the personal situation may require a larger amount to be insured in future.
Bundled life and TPD policies can be recommended since bundling multiple policies with one plan insurer can help Bill in negotiating the reduction of price. Most of the unbundled policies come at a cost (Fischer 2006). In agreed value the cover is calculated at the time one applies for the policy and one is supposed to prove his/her income at the date of applying, on the contrary, indemnity protection cover is calculated on the income when making a claim. Considering the Bill budget, he should take indemnity protection cover since it has low premiums and has a simplified application process.
Under the indemnity principle and customs law, the insurer is not supposed to recover more than the actual loss from the policy insurer (Fischer 2006).Over-insuring of the house has several consequences as most of the policies usually contain premiums that typically increase making the plan to be quite costly.
Group insurance is a type of insurance that covers a specific group of people; this person can be a society, employees of a particular organization or any other association group (Gerber 2005). This group insurance can offer less flexibility to Bill based on the cover he might be wanting. The policy can only provide cover for him only in the employee’s membership group life insurance. Bill needed a life insurance policy that can cover his family too.
Bill considered taking life insurance, term life insurance is the most suitable type since the policyholders of this insurance provide cover with no saving and it is the cheapest. Bundled life and TPD policies can be recommended since bundling multiple policies with one plan insurer can help Bill in negotiating the reduction of price. Group insurance offers less flexibility to life cover.
Gerber, H.U., 2005. Life insurance. In Life Insurance Mathematics (pp. 23-33). Springer Berlin Heidelberg.
Fischer, E., 2006. Rule of Insurable Interest and the Principle of Indemnity: Are They Measures of Damages in Property Insurance, The. Ind. LJ, 56, p.445.