The Law of Insurance-1938

Life insurance

“Life insurance business” means the business of effecting contracts of insurance upon human life. It includes:

(i)any contract whereby the payment of money is assured upon death or the happening of any contingency dependent on human life:

(ii)any contract which is subject to the payment of premiums for a term dependent on human life;

(iii)any contracts which includes the granting of disability and double or triple indemnity accident benefits; the granting of annuities upon human life.   -Sec. 2(11). 

 

Life insurance Vs. Other insurance

Life insurance differs fundamentally from other forms of insurance. The points of difference can be summed up as follows:

(i) Life insurance is a contract depending on human life. Most of the other forms of insurance related to property.

(ii) In life insurance, the liability of insurer arises upon death of the person or attainment by him of a certain age. In other forms of insurance the peril insured against may or may not occur. 

(iii) Life insurance is a contingent contract. The full amount mentioned in the policy must be paid on the happening on the contingencies, either death or time lapse. Other forms of insurance are usually 

  contract of indemnity. 

(iv) In life insurance, there must be insurable interest at the time the contract of insurance is entered into. In fire and marine insurance, insurable interest must exists at the time the loss occurs.

v) Life insurance contract are long term contracts. Fire, marine, accident and other forms of insurance are generally entered into for one year subject to renewal at the end of the year. 

 

Types of Life Insurance Policies

There are various types of life insurance policies. The principal types are-

(i)  The whole life policy- a whole life policy is one under which a lump sum of money is payable upon the death of the assured to his nominees.

(ii)  The endowment policy- an endowment policy is one under which a lump sum of money is payable to the assured upon his attaining certain age or in the event of his dying earlier, to his nominees. 

(iii) The joint life policy- a joint life policy involves the insurance of two lives simultaneously. The policy money is payable upon the death of any one of the lives insured.

If there is a joint life policy of A and B, the money is payable upon the death of either A or B. A and B may be husband and wife or partners in a firm.

(iv) Annuities- An annuity policy is one under which the policy money is payable to the assured by monthly or annual installment after he attains a certain age. The assured pays premium up to a certain age or sometimes a lump sum money. The insurer pays a certain sum monthly or annually to the assured after he attains a certain age. The usual object of annuities is to provide for one’s old age.