Life insurance or life assurance is a contract between the policyholder and the insurer, where the insurer agrees to pay to a named beneficiary a sum of money upon the occurrence of the death of the insured individuals ou another event, such as terminal illness or serious illness . In return, the policy owner agrees to pay a stipulated amount (at regular intervals or in lump sums.) It is possible that the designs in some countries where bills and death expenses of more than catering for after funeral expenses should be included in the policy premium. In the United States, the predominant form simply specifies a lump sum paid to the insured’s death.

The value of the policy stems not from a real incident, but is the value derived from the “peace of mind” experienced by the policyholder, because the denial of the adverse financial consequences caused by the death of the Insured life.

Life policies are legal contracts and terms of the contract describe the limitations of the insured events. Specific exclusions are written into the contract to limit the liability of the insurer, for example claims relating to suicide, fraud, war, riot and civil commotion.

contracts based life tend to fall into two main categories:

Protection policies – designed to provide a benefit in the event of specified event, typically a lump sum payment. A common form of this design is term insurance.

Investment policies – where the main objective is to facilitate the growth of capital by regular or single premiums. Common forms (in the U.S. anyway) are whole life, universal life and variable life policies.