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What Is Industrial Life Insurance?

A. Garrett
A. Garrett

Industrial life insurance is a life insurance policy that provides a death payment that is substantially less than other forms of life insurance. Premiums associated with industrial life insurance are usually due to the insurer monthly or weekly. The frequency of industrial life insurance payments coupled with the low value of payouts make such policies highly controversial. The benefits paid out often fail to cover burial costs and over time the premiums paid by the insured can actually exceed the face value of the policy. Some municipalities, states, and countries have deemed industrial life insurance policies unfair to low-income wage earners and prohibited the issuing of them because of their low benefits.

These insurance policies gained popularity in the late 19th century. The combination of low premiums and small cash benefits upon death made them very attractive to workers in the industrial age. Furthermore, payment was easy because insurance company representatives often collected payments directly at the homes of the insured.

Man climbing a rope
Man climbing a rope

Regulation of the insurance industry has led to industrial life insurance policies adopting relatively uniform attributes throughout the world. For example, the term “industrial life insurance” usually must be printed clearly on the policy contract and in the description of benefits provided. Collection methods may also be governed by a certain set of rules.

Policyholders are typically given a grace period for which they can make payments without having their policies voided by the insurance provider. If the insured dies during the grace period, the company still must settle the claim. Overdue premiums may be deducted from the death benefit however. Some regions even allow for policies to be reinstated if the amount overdue is paid in full before a certain number of years pass.

Also, after a certain period of time has passed during the lifetime of the insured, the policy becomes incontestable and industrial life insurance policy issuers must pay the death benefit. This is enforced even if the insurance company gains knowledge of a condition or stipulation unknown to both the insured and insurer during his lifetime that would have disqualified him from coverage.

To prevent companies from intimidating or defrauding the benefactors of industrial life insurance policies, many governments have also regulated the claims process. Insurers are usually required to process claims and pay settlements within a certain period of time after receiving proof of death such as a death certificate. If the named beneficiary of an industrial life insurance policy is a minor or mentally disabled, insurers are required to make payments to the executor of the insured’s will, the beneficiary’s guardian, or the closest blood relative to the insured.

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