Life Insurance | Functions and Types

Human life is surrounded with various risks and threats. It is impossible to eliminate these risks but a person can reduce the economic losses arising from such uncertainties and threats.
 Insurance is the way of minimizing the financial losses arising from such threats, uncertainties and risks. Insurance is the contract between two parties, they are insurer and insured.

Insurance is the contract of identifying the losses occurred due to any sort of risk in consideration of the premium. It gives financial security against such risks and uncertainties. 

Primary functions of insurance

The primary function of insurance is to immediately follow the measures to protect from losses. The primary functions are:

  • Provide certainties and protection
  • Distribute risks
  • Secondary Function
  • Mobilization of capital
  • Support in foreign trade
  • Maintain financial stability
  • Prevent losses
  • Increase efficiency

Life Insurance

Life insurance is one of the most familiar from of insurance. It is more popular than other. Life insurance provides financial protection. It encourages to save money for the future. 
It is clear that life insurance is a contract, which provides economic safety to the insured or his/her nominee. It includes the elements of investment as well as protection. 

Types of Life Insurance

  • Term life insurance
  • Anticipated endowment life insurance
  • Children education and marriage endowment life insurance
  • Whole life insurance

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