The modern life insurance contracts that we have today such as life insurance, originated from the practice of merchants in the 14th century. It has also been acknowledged that different strains of security arrangements have already been in place since time immemorial and somehow, they are akin to insurance contracts in their embryonic form.
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The phenomenal growth of life insurance from almost nothing a hundred years ago to its present gigantic proportion is not of the outstanding marvels of present-day business life. Essentially, life insurance became one of the felt necessities of humankind due to the unrelenting demand for economic security, the growing need for social stability, and the clamor for protection against the hazards of cruel-crippling calamities and sudden economic shocks. Insurance is no longer a rich man’s monopoly. Gone are the days when only the social elite is afforded its protection because, in this modern era, insurance contracts are riddled with the assured hopes of many families of modest means. It is woven, as it were, into the very nook and cranny of the national economy. It touches upon the holiest and most sacred ties in the life of man. The love of parents. The love of wives. The love of children. And even the love of business. Serving the interests of our clients. Personalized support and relationships matter to us. Because we are owned by banks, we are empowered to deliver top-notch support and services.
Life Insurance as Financial Protection
A life insurance policy pays out an agreed amount generally referred to as the sum assured under certain circumstances. The sum assured in a life insurance policy is intended to answer for your financial needs as well as your dependents in the event of your death or disability. Hence, life insurance offers financial coverage or protection against these risks.
Life Insurance: General Concepts
Insurance is a risk-spreading device. Basically, the insurer or the insurance company pools the premiums paid by all of its clients. Theoretically speaking, the pool of premiums answers for the losses of each insured.
Life insurance is a contract whereby one party insures a person against loss by the death of another. An insurance on life is a contract by which the insurer (the insurance company) for a stipulated sum, engages to pay a certain amount of money if another dies within the time limited by the policy. The payment of the insurance money hinges upon the loss of life and in its broader sense, life insurance includes accident insurance, since life is insured under either contract.
Therefore, the life insurance policy contract is between the policyholder (the assured) and the life insurance company (the insurer). In return for this protection or coverage, the policyholder pays a premium for an agreed period of time, dependent upon the type of policy purchased.
In the same vein, it is important to note that life insurance is a valued policy. This means that it is not a contract of indemnity. The interest of the person insured in hi or another person’s life is generally not susceptible of exact pecuniary measurement. You simply cannot put a price tag on a person’s life. Thus, the measure of indemnity is whatever is fixed in the policy. However, the interest of a person insured becomes susceptible to exact pecuniary measurement if it is a case involving a creditor who insures the life of a debtor. In this particular scenario, the interest of the insured creditor is measurable because it is based on the value of the indebtedness.