What is the life insurance and discuss its principles and procedure of getting the life insurance policy

Life Insurance :-
Life insurance is a contract which provides financial protection to the heirs in case of death. An insurance company receives premium in exchange of taking this risk. If insured person remains alive during the particular period then insurance company returns the principle amount with interest.

Objectives :- The objective of life insurance is to provide the financial protection to dependents when the earning member dies.


Principles or Essentials of Life Insurance

1. Absolute Good Faith :-
The principal of absolute good faith is applied in the life insurance. Both the parties should disclose every fact before each other. Insured should also provide the correct information's about his health. It is a personal contract between insurer and insured.

2. Insurable Interest :-
For the validity of insurance contract of life insurance must be supposed by an insurable interest. At the time of policy taking, it must be present in life insurance. For example a husband has insurable interest on his wife and wife has also on husband. Insured amount is definitely paid in the life insurance policy. Principle of indemnity is not applied in life insurance.


Procedure of Getting the Life Insurance Policy

1. Personal Form :-
The person who wants to be insured should fill the form of proposal. He will provide the various information's like name, profession, health condition, date of birth, heirs name etc. He should write true facts otherwise contract will be invalid.

2. Medical Examination :-
As the insurance company receives the proposal form proposer will be medically checked up. After receiving the doctors report proposal will be considered.

3. Acceptance of Proposal :-
If the company is satisfied then it accepts the proposal and asks the proposer to deposit the premium. After the payment of premium insurance contract completes.

4. Issue of Policy :-
On the receipt of the premium insurance company issues the life insurance policy. Policy states the name policy number, contract date, amount and names of the nominated heirs.