Life insurance is a legally binding contract. For a life insurance policy to remain in force, the policyholder must pay a single premium up front or pay regular premiums over time. When the insured dies, the policy’s named beneficiaries will receive the policy’s face value, or death benefit.

How can you describe life assurance in an insurance company?

Life insurance (or life assurance, especially in the Commonwealth of Nations) is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of an insured person (often the policy holder).

How do you describe life insurance?

Life insurance is a contract between you and an insurance company. Essentially, in exchange for your premium payments, the insurance company will pay a lump sum known as a death benefit to your beneficiaries after your death. Your beneficiaries can use the money for whatever purpose they choose.

Who is the insured on a life insurance policy?

The insured: Person whose life is insured. The policyholder may also be the insured. For instance, a husband might purchase an insurance policy on his own life to protect his wife and children in case of his death. In that case, the husband is the policy owner and the insured.

What happens if you never tell your beneficiary about your life insurance policy?

If you never tell your beneficiaries about your life insurance policy, it doesn’t mean the insurer won’t pay them after your death. It does make it a more difficult process though. While most life insurance companies conduct database checks for the death of policyholders so beneficiaries will get paid, not all of insurers do so in a timely manner.

What are the legal concepts of a life insurance contract?

Chapter3. Legal Concepts of the Insurance Contract ¶ A contract is an agreement enforceable by law. It is the means by which one or more parties bind themselves to certain promises. With a life insurance contract, the insurer binds itself to pay a certain sum upon the death of the insured.

What does the face value of a life insurance policy mean?

The face value of a life insurance policy is also called the death benefit. This is the amount the insurance company will pay the beneficiaries named on the policy upon the death of the policyholder. Whole life insurance policies, while counted towards Medicaid’s asset limit, are exempt (not counted) up to a certain face value.