Unit 3: Life Insurance
3.1 Definition, Nature and Scope
Life insurance — the insurer’s promise to pay the sum assured on the insured’s death (or survival to the term’s end). The nature: the benefit contract — not the indemnity (the life’s not measurable in money); the savings-and-protection blend (the premium’s part payment, part investment); the long-term contract (the decades’ duration — the policy’s value faces). The scope: the individual life covers; the group life (the employer’s schemes); the endowment’s maturity faces; the riders (the accident-and-health additions); the annuity’s faces (the pension forms — the old-age income).
3.2 Classification of Life Insurance: Whole Life, Endowment, Term Life; Policy and Formation of a Life Insurance Contract
- Whole life insurance — the sum payable at death, whenever it comes; the permanent protection; the premium’s forms (the limited-payment faces).
- Endowment insurance — the sum at the term’s end or the earlier death — the savings-heavy form (the maturity’s certainty).
- Term life insurance — the sum only if death within the term — the pure protection (the cheapest cover; the no-maturity feature).
- The newer products — the unit-linked (the investment-linked faces); the money-back (the periodic returns).
The policy’s formation: the proposal (the application — the disclosure’s home); the medical examination (the underwriting’s tool); the acceptance (the insurer’s risk decision); the first premium; the policy’s issue (the document — the standard terms plus the schedule); the free-look period’s modern faces (the policyholder’s short-window return right — the regulator’s protection).
3.3 Events Insured against in Life Insurance Contract
The death (the core event — the natural-and-accidental faces); the survival (the endowment’s maturity — the living benefit); the disability (the riders — the accident-and-sickness faces); the critical illness (the modern riders — the diagnosed diseases’ covers); the longevity (the annuity — the outliving-the-savings risk). The exclusions’ faces: the suicide clause (the early-year bar); the dangerous-occupation-and-avocation disclosures’ breach; the fraudulent concealment (the health history’s non-disclosure — the claim’s repudiation ground).
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