R. Charu Latha
“Life is full of risks.
For property, there are fire risks,
for shipment of goods, there are perils of the sea,
for human life, there is the risk of death or disability and so forth”
The concept of life insurance was introduced with the objective of providing a lump sum money on the death of the sole bread-winner and securing the financial interests of that family. With time, it has evolved so much.
Life insurance is an agreement in which one party agrees to pay a given sum of money upon the happening of a particular event upon the duration of human life in exchange for the payment of consideration.
Essentials:
It is a contract relating to human life.
The contract provides for payment of a lump sum of money.
The amount is paid at the expiration of a certain period or on the death of a person.
For any insurance contract, the insurable interest is the factor considered while fixing the premium. In life insurance, it is the “human life value” and the risk associated therewith. The factors that are taken into account while calculating the risk include -
Age
Medical history
Habits
Occupation, etc.
The premium amount acquired from the policyholder will be invested to safeguard the interest of such a policyholder. It is the obligation of the insurance company to ensure the availability of adequate funds at any point in time.
Note: September 1st week being celebrated as the ‘Insurance Week’.
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