Page 45 - MODULE1_Insurance Introduction_CHA

1. Life Insurance

Life Insurance is a financial cover for a contingency linked with

human life, like death, disability, accident, retirement etc.

Human life is subject to risks of death and disability due to

natural calamities; result of medical conditions and due to

accidents. When human life is lost, or a person is disabled

permanently or temporarily – so that he / she is not able to be

productive/ gainfully employed there is loss of income to the

household.

Though human life can never be valued, a monetary sum could

be determined based on the loss of income in future years,

which in itself would depend on several factors like age of the

person, earning capability today, ability to pay premium for the

policy period and risk associated with the ‘life’ in question.

Hence, in life insurance, the Sum Assured (or the amount

guaranteed to be paid in the event of a specified loss) is by way

of a ‘benefit’.

Life Insurance products provide a definite amount of money in

case the life insured dies during the term of the policy or

becomes disabled on account of an accident. Conditions other

than death have specific pointers listed that the event has to

45