Meaning of life insurance and its types of policies
is popularly referred to as life assurance. In the case of life insurance, the underwriter agreesto pay the assured or his heirs, a certain sum of money on death or on the happening of an event dependentupon human life in consideration of premiums paid by the assured.Section 2(11) of the Insurance Act, 1938 defines Life Insurance business as follows: ³Life InsuranceBusiness´ is the business of effecting contracts of insurance upon human life, including any contractwhereby the payment of money is assured on death (except death by accident only) or the happening of anycontingency dependant on human life and any contract which is subject to the payment of premiums for aterm dependant on human life and shall be deemed to include:(a) The granting of disability and double or triple indemnity accident benefits if so provided in the contractof insurance.(b) The granting of annuities on human life; and(c) The granting of superannuation allowances and annuities payable out of any fund applicable solely to therelief and maintenance of persons engaged in any particular profession, trade or employment or of thedependants of such persons´.
e important types of life insurance policies are:
hole Life Policy2.
Joint Life Endowment Policy4.
Family Protection Policy5.
hole Life Policy7.
Money Back Policy
ole Life Policy
Whole Life Assurance:
This is the purest form of permanent contract. Premiums are payablethroughout the Life time of the life assured and the sum assured is payable only at his death. Theelement of protection of dependants is the dominating element and that of provision for old age istotally absent. This type of assurance provides a larger amount of ³life cover´ than any other permanent type of life assurance and it is therefore the most inexpensive form of permanent protection for dependants. It has the disadvantage that premiums continue in old age when the abilityto pay them may be lessened by contraction of income. To obviate this difficulty the Corporation haddecided that under these tables premiums are now limited to a maximum number and are payableeither till age 80 or till 35 annual premiums are paid whichever is later. For example a person aged30 has to pay premiums for a maximum period of 50 years if he survives this period while a personaged 50 will have to pay for a maximum period of 35 years (i.e. not till age 80 but also beyond if hesurvives beyond age 80).
ith this benefit extended to all policies including those issued by the previous Insurers, the Corporation has no whole life assurance contract where under premiums are payable indefinitely throughout life.
Whole Life Assurance by Limited Premiums:
nder this type of policy, it can be arranged that premiums cease at retirement age so that the difficulties of maintaining the premiums in old age areremoved.
hen the premium cease, the policy becomes fully paid-up. ³
ith profits´ policiescontinue to participate in profits till the claim arises even though the premiums have ceased.
This is undoubtedly the most popular form of assurance at the present time.
nder this class of contract, thesum assured is payable at the expiration of a fixed term of years or at death should that occur previously.This type of policy is really a combination of Life assurance and investment. In the case of policies runningfor long terms the assurance element predominates while in the case of assurances maturing at the end of