Human lives are most precious thing in this world. Safety and security of human lives are the first and foremost concern of the human kind. Since life insurance provides financial security to human lives, it is most important form of insurance. This is perhaps the reason why life insurance occupies more than eighty percent of the entire insurance business in the world.
Life insurance is a contract by which the insurer assures the insured to make payment of insured amount either to the insured or after expiry of the period of the contract or to nominee of the insured after his death, whichever occurs earlier. It is a legal contract between insurer and insured. The insurer being the insurance company and the insured being the person who seeks financial security of his life.
The insurance company takes all the risks of the insured through this contract. It has to pay certain amount to the insured either after the maturity of the contract period or after the death of the insured before the maturity period. In the latter case, the insurer has to pay the amount to the nominee of the insured.
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Under the life insurance contract, the insurer takes a vital responsibility of guaranteeing the financial security of his future life, while the insured is required to pay premiums to the insurer either in limp-sum or in convenient but agreed installments until the expiry of contract or the death of the insured. Thus, the contract in which the insurer assures the insured or his nominee to pay definite insured amount under a given circumstances is known as life insurance. By life insurance, the insured person is benefited if he remains alive, but if he dies, his nominee or the family members are benefited.
