Life Insurance

Ranbir's Life

Ranbir works in a construction company.

His work requires him to travel to different countries and cities to visit various construction sites.

He visits buildings that are still under construction. Such construction sites can be dangerous.

The nature of his work exposes him to many risks and uncertainties.

Ranbir is the sole earning member of the family. His wife and two children are dependent on his earnings.

Ranbir Decides to Secure His Future

One day, Ranbir started thinking about his future.

He realized that he has to make sure that his family is protected in case anything were to happen to him.

He decided to take a life insurance policy that would protect him against the uncertainty of life.

Ranbir visited Protec Insurance Company. He found out that there are various types of insurance policies available to him.

A few of his options were; disability insurance, health/medical insurance, annuity insurance and life insurance.

Ranbir enters into a contract with the insurance company after choosing the type of life insurance he wants.

The contract will ensure that the insurance company will protect Ranbir by paying a sum of money in case of any unexpected event in his life. E.g. death.

In exchange for the insurance, Ranbir will have to make payments to the insurance company. Such payments are known as premium.

The payments can be made in one go, or in installments such as monthly, quarterly, half-yearly or yearly.

In this case, since Ranbir is taking life insurance, he will be called the assured. And the company will be known as the insurer.

Life insurance provides protection to the Ranbir's family in case of his unexpected death.

It also makes sure that Ranbir will have enough money to live a decent life during his old age when his earning capacities are reduced.

Life insurance also encourages Ranbir to save as the amount of premium has to be paid regularly.

Types of Life Insurance Policies

Under life insurance policies, Ranbir could choose a plan that will best suit his needs.

Here are some of the options that were available to him.

Whole Life Policy: Ranbir will have to pay a premium regularly for a fixed period (20 or 30 years) or for the whole of his life.

The sum of money then becomes payable by the insurance company only after his death. His wife and children can claim the money.

Endowment Life Assurance Policy: Ranbir will only have to pay a premium for a fixed period of time.

The amount of money becomes payable after the decided period of time or upon his death, whichever is earlier.

Joint Life Policy; Two or more people could take up this policy together. For example, Ranbir and his wife could take up this policy together.

The premium is paid jointly or by either of them in installments or at one go.

The insurance company will have to pay the money to the other member if any one person dies.

Annuity Policy: Ranbir can pay a premium for a period of time and receive regular payments from the company later on during his old age.

Children’s Endowment Policy: Ranbir can take this policy for his children to meet the expenses of their education or marriage.

Ranbir will have to pay the premium and the insurer will have to pay the children when they attain a particular age.


A life insurance policy allows an individual to be protected against any unexpected event such as death etc.

The individual will have to pay the insurance company some amount of money known as premium either in installments or altogether.

In return, the insurance company will repay the individual or his/her dependents upon the expiry of a fixed period of time or upon his/her death.

A few of the types of life insurance policies available are; whole life policy, joint life policy, and annuity policy.

The End.