This document discusses the key elements of life insurance. It defines life insurance as a contract between an insurer and policyholder where the insurer pays a sum of money to beneficiaries when the insured person dies in exchange for premiums paid. It outlines the main principles of life insurance contracts including offer and acceptance, consent of parties, legality of purpose, and consideration. It also describes different types of life insurance plans such as individual plans, group plans, and pension plans. It defines the classification of insurable risks and annuities.

1. ELEMENTS OF INSURANCE
F. JOSEPHINE LENTA
ASSISTANT PROFESSOR
DEPARTMENT OF COMMERCE
COLLEGE OF SCIENCE AND HUMSNITIES
SRM IST
RAMAPURAM

2. UNIT 2
LIFE INSURANCE

3. LIFE INSURANCE
 Lifeinsuranceis a contract between a life insurance
company anda policy owner.
 A life insurancepolicy guaranteesthe insurerpays a sum
of money to one ormore namedbeneficiarieswhen the
insuredperson diesin exchangefor premiums paidby the
policyholder duringtheir lifetime.
 If the paymentis to be madeon the deathof the insured,
the insuredmay nominatea person to receive the
amount. If the amountis to be paidon the expiry of a
certainnumber of years,then the insuredmay himself
receiveit if he is aliveon the expiry date.Otherwise, his
nominee will receiveit.

4. PRINCIPLES OF LIFE INSURANCE
 OFFER AND ACCEPTANCE
 CAPACITY OF PARTIES
 FREE CONSENT
 LEGALITY OF OBJECT
 CONSIDERATION
 UTMOSTGOODFAITH
 INSURABLE INTEREST

5. DIFFERENT PLANS OF LIFE INSURANCE
 Individual plans
 Group Insurance plans
 Pension plans

6. INDIVIDUAL PLANS:
 Whole Life schemes
 Endowment schemes
 Termassuranceplans
 Plans for needsof children
 Periodicmoney backplan
 Plans for the benefit of handicapped
 Plan to cover housing loan
 Joint life plan
 Plan for high worth individuals
 Investment plan

7.  Employer- employee group;
 Labor union group;
 Creditor - Debtor;
 Voluntary group like that of teachers, doctors or
lawyers.
Group Insurance plans
 Salary of the employee
 Job classification
 Length of the service.

8. CLASSIFICATION OF RISK ELEMENTS
 UninsurableRisk
 Insurable Risk
 Uninsurable risk: It refers to that risk where the
mortality rate is so high as to make the premium for
the assured completely prohibitive.
 Insurable Risk: An insurable risk is one which can
b insured on standard terms and conditions or
otherwise.

9. ANNUTIES:
According to D.S. Hansell,”Annuity is a form of pension,
whereby in return for a certain sum of money (paid in a
lump sum or by installment)the insurer agrees to pay
the annuitant an annual amount (an annuity) for a
specified period or for the remainder of the annuitant’s
life”.