The Basics Of Life Assurance

At its most basic definition, life assurance is simply an agreement between a policyholder and an insurer whereby the insuring company agrees to pay a certain amount of money in the event of the death or terminal illness of the policyholder. The policyholder, for his part, will pay a predetermined amount of money regularly or in full, the premium. In some cases, life assurance agreements are designed to cover many of the expenses that are associated with the death of the policyholder, including funeral expenses and even catering. In countries such as the United States, life assurance agreements simply provide for a lump sum that will be paid upon the death of the policyholder.

Life assurance policies are essentially legal contracts in which the limitations of the insured event or events are covered in the terms of the contract. In most cases, the terms of the plan will specify details that are intended to limit the liability of the insuring company. These limitations most often include such factors as suicide, fraud, wars, riots and civil disturbances.

Life assurance plans generally fall into two broad categories, although there may be some plans that are slight variations on these. These categories are protection policies and investment policies. Protection policies are intended to provide benefits in the form of a lump sum payment to the policyholder upon the occurrence of a specific event. Investment policies, on the other hand, are designed to aid the policyholder with capital growth by way of regular or single premiums.