Life Insurance :

What is Life Insurance?

Life Insurance is a contract providing for payment of a sum of money to the person assured or, to the person entitled to receive the same, on the happening of a certain event.

A family is dependent for its food, clothing and shelter on the income brought by the family's breadwinner. The family is secure so long as this breadwinner is alive and is capable of earning. A sudden death (or disability) may leave the family in a financially difficult situation.

Uncertainty of death is inherent in human life and this uncertainty makes it necessary to have some protection against the financial loss arising from untimely death. Life insurance offers this protection.

The earliest type of life insurance was started by the Greeks and Romans. Contributions were made by all surviving members for the burial cost of a member. In case of the death of a member the cost of burial was made out of the contributed fund.

It works like this – it consists of a system where associations of individuals were formed without any reference to age, and a fund was created by equal contributions from each member. The sum collected is invested, and at the end of each year the interest was divided among the survivors. The last remaining survivor received both the year's interest and the entire amount of the principal.