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92 BUSINESS  STUDIES sum of money, on the happening of a sort of investment because a certain a specified event contingent on the sum is returnable to the insured at human life or at the expiry of certain the time of death or at the expiry of a period. Thus, the insurance company certain period. undertakes to insure the life of a Life insurance also encourages person in exchange for a sum of money savings as the amount of premium has called premium. This premium may be to be paid regularly. It thus, provides paid in one lump sum, or periodically a sense of security to the insured and i.e., monthly, quarterly, half yearly or his dependents. yearly. At the same time, the company The general principles of insurance promisestopayacertainsumofmoney discussed in the previous section apply to life insurance also with a few either on the death of the person or on his attaining a certain age (i.e., the exceptions. The main elements of a life expiry of certain period). Thus, the insurance contract are: person is sure that a specified amount (i) The life insurance contract must have all the essentials of a will be given to him when he attains a certain age or that his dependents will valid contract. Certain elements get that sum in the event of his death. like offer and acceptance, free This agreement or contract which consent, capacity to enter into contains all the terms and conditions a contract, lawful consideration and lawful object must be present is put in writing and such document is called the policy. The person whose life for the contract to be valid; is insured is called the assured. The (ii) The contract of life insurance is a insurance company is the insurer and contract of utmost good faith. The assured should be honest and the consideration paid by the assured is the premium. The premium can be truthful in giving information to paid periodically in instalments. the insurance company. He must This insurance provides protection disclose all material facts about to the family at the premature death or his health to the insurer. It is his gives adequate amount at old age when duty to disclose accurately all earning capacities are reduced. The material facts known to him even insuranceisnotonlyaprotectionbutis if the insurer does not ask him; Examples of facts to be disclosed Fire insurance:Construction of building, fire detection and fire fighting equipment; nature of its use. Motor insurance: Type of vehicle; driver details. Personal Accident insurance: Age, height, weight, occupation, previous medical history. Life insurance: Age, previous medical history, smoking/drinking habits. Reprint 2026-27