Life Insurance

Life insurance is actually a type of contract between the insurer and the policy holder, the insurer has to pay a selected benefitting sum of money upon the death of the person who is insured. Because of this Life insurance contract some events which occur like terminal illness or some critical illness may also generate payment.

 

The policy holder in return also agrees to pay a predetermined amount which is called "premium" at regular intervals or in lump sum amount. Death expenses such as funerals also included in the premium in some countries where as in USA the main form specifies a lump sum has to be paid on insured failure.

Life insurance policies are actually the legal contracts and some limitations of insured events are also described in contract. Some of the specific eliminations are written on contract to limit the insurer liability, some examples are claims related to fraud, civil disorder, war, riot and suicide.

Some major categories of Life insurance policies are:

Policy of protection: This policy is designed to give benefit in specified event on lump sum payment and it is termed as Insurance

Policy of investment: This policy is designed to facilitate the growth of capital by premium. Some common forms used in US are whole life, universal life and variable life policies.