Life Insurance

Business Studies

definition

Main elements of Life Insurance

  • Since life itself is uncertain, all individuals try to assure themselves of a certain sum of money.
  • Life insurance is taken not only to take of an individual but also family members in case of death.
  • The insurance company undertakes to insure the life of a person in exchange for a sum of money called premium. This premium may be paid in one lump sum, or monthly, quarterly, half yearly or yearly.
  • The company promises to pay a certain sum of money either on the death of the person or on his attaining a certain age (i.e., the expiry of certain period).
  • Thus, the person is sure that a specified amount will be given to him when he attains a certain age. His children will get that sum in the event of his death.
  • The different types of life insurance policies are whole life insurance, annuity policy, etc.

definition

Types of Life Insurance policies

Following are the types of Life Insurance policies.
(i) Whole Life Policy: In this kind of policy, the amount payable to the insured will not be paid before the death of the assured. The sum then becomes payable only to the beneficiaries or heir of the deceased.
(ii) Endowment Life Assurance Policy: The insurer (Insurance Company) undertakes to pay a specified sum when the insured attains a particular age or on his death whichever is earlier. The endowment policy matures after a limited number of years.
(iii) Joint Life Policy: This policy is taken up by two or more persons. The premium is paid jointly or by either of them in installments or lump sum.
(iv) Annuity Policy: Under this policy, the assured sum or policy money is payable after the assured attains a certain age in monthly, quarterly, half yearly or annual installments.

definition

Concept of Life Insurance

  • A life insurance policy was introduced as a protection against the uncertainty of life.
    Life insurance may be defined as a contract in which the insurer inconsideration of a certain premium, either in a lump sum or by other periodical payments, agrees to pay to the assured, or to the person for whose benefit the policy is taken, the assured sum of money, on the happening of a specified event contingent on the 
    human life or at the expiry of certain period. 
  • Life insurance may be defined as a contract in which the insurer inconsideration of a certain premium,either in a lump sum or by other periodical payments, agrees to pay to the assured, or to the person for whose benefit the policy is taken, the assured sum of money, on the happening of a specified event contingent on the human life or at the expiry of certain period.
  • The insurance company undertakes to insure the life of a person in exchange for a sum of money called premium. This premium may be paid in one lump sum, or periodically i.e. monthly, quarterly, half yearly or yearly. At the same time, the company promises to pay a certain sum of money either on the death of the person or on his attaining a certain age (i.e., the expiry of certain period).