Subject: Accountancy
Life insurance is one of the common forms of insurance that comprises 80 percent of the total insurance business done in the world. It was started in England and other European countries in the 16th century. The life insurance in modern lines was developed in the 18th century.
Life insurance is the contract between policy holder and the insurance company where insurance company undertakes the risk of compensation of insured sum either at the majurity period or after the death of insured to the nominee. It is also known as a contingent contract because the loss of the life cannot be compensated, but the financial compensation is provided to the nominee for the loss of insured life.
The following are the main definitions of life insurance: -
“Life insurance contract may be defined as the contract where by the insurer in the consideration of a premium undertakes to pay a certain sum of money either on a death of the insured or on the expiry of the fixed period.” – M. N. Mishra
“The life insurance contract embodies an agreement, in which, broadly stated the insurer undertakes to pay a stipulated sum upon the death of the insured, or at some designated time to designated beneficiary.” – John H. Maggee
What is life insurance?
Life insurance is the contract in which the insured agrees to pay the premium to the insurer against which the insurer promises to compensate the insured sum of money on the happening of an event.
What is life insurance? Explain its types in brief.
Life insurance is one of the common forms of insurance. It has secured a special position all over the world. It is estimated that life insurance comprises 80 percent of the total insurance business done in the world. It was started in England and other European countries in the 16th century. The life insurance in modern lines was developed in the 18th century.
According toM. N. Mishra,“Life insurance contract may be defined as the contract whereby the insurer in the consideration of a premium undertakes to pay a certain sum of money either on a death of the insured or on the expiry of the fixed period.”
From the above definition, it is clear that lifeinsurance is the contract in which the insured agrees to pay the premium to the insurer against which the insurer promises to compensate the insured a sum of money on the happening of an event. It contains the elements of investment as well as protection. It is considered as an investment as the insured gets the amount of insurance with a bonus on the maturity of the policy. It is considered as protection as the nominee gets the financial compensation in the case of the death of the insured. It is also known as acontingent contract because the loss of the life cannot be compensated, but the financial compensation is provided to the nominee for the loss of insured life.
The following are the types of insurance:
What is whole life insurance?
The insurance which is done for the whole life of human being is known as whole life insurance. Under this policy, the insured should pay the premium regularly throughout the life and the insurer pays the sum assured only to the nominee or dependent of insured after his/her death.
What is the main aim of whole life insurance?
The main aim of whole life insurance is to provide financial protection to the member of the family after one’s death.
What is endowment life insurance?
The life insurance which is done for fixed period such as 15, 20, 25 years etc. is called endowment life insurance. Under this type of life insurance, the insured should pay the premium amount up to the specified period and sum assured is paid by the insurer on either maturity or his/her death whichever is earlier.
What is children's education and marriage endowment life insurance?
Children's education and marriage endowment life insurance is a life insurance in which the amount of premium will be paid for a certain period to manage the fund for the further education and marriage of a child.
What is term life insurance?
Term life insurance is the insurance policy purchased by a debtor for a short period to ensure the repayment of a loan to the creditor. It is done for a short period to provide protection against the debt taken in case of death of debtor before payment of the debtor.
Explain in short about children's education and marriage endowment life insurance.
Children's education and marriage endowment life insurance is a type of life insurance in which the amount of premium will be paid for a certain period to manage the fund for the further education and marriage of a child. Under this policy, the parent should pay the insurance premium regularly up to the fixed period as agreed and the child’s name is kept as his/her representative. The insurer agrees to pay the amount insured when the child attains certain age or period in expired which can be used for children’s education and marriage. If the child dies before the maturity of the policy, no premium is payable to the insurer. The other terms and condition are applied like in endowment life insurance.
Explain in short about term-life insurance.
Term life insurance is the insurance policy purchased by a debtor for a short period to ensure the repayment of a loan to the creditor. It is done for a short period to provide protection against the debt taken in case of death of debtor before payment of the debtor. However, the insurance company should not pay any amount in case of survival of insured till the maturity of the period. An amount of insurance premium under this insurance will be nominal.
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