Life insurance is an agreement between the policy holder and the insurance company. In this agreement the insurance company pays a certain amount of money in case of serious poor health or death of the policy holder. The policy holder agrees to pay a certain premium after regular intervals.
It can be in the form of lump sum also. There could be some plans in various nations where receipts and the expenses of death as well as cuisine for after funeral expenses must be added in the policy premium. In the US, the main form tells a lump sum amount to be paid in case of policy holder’s death.
Life insurance is a treaty between the policy holder and insurance company and here a profit is remunerated to the nominated receiver if an unfortunate incident takes place which is enclosed in the plan.
The actual value of this insurance is calculated, not from the claims, but from the mental piece which an insurer gets after taking the policy. It helps your family in ill-fated situations.
Life insurance has different parties of contract. They are policy holder and insured. A policy holder can be an insured person but it is not necessary that insured is also a policy holder. I would like to share an example. If a person buys policy under his name and he do not add the name of anybody as insured then he is the policy holder as well as insured.
There is one more person who buys policy under his name and he adds the name of his wife as an insured then in this case the person would be the policy holder. His wife would not be the policy holder. She would not be responsible to pay for the policy. Fundamentally there are two types of insurances. The first one is called provisional period insurance.
In this insurance the coverage is given for a particular period of time for a particular premium. The second one is called stable life insurance which stays in-line until the policy gets matured, unless the policy holder does not pay the premium on time.