There is an element of investment in the life insurance, because the amount of the policy is received in both the case i.e., on the death of the insured or at the expiry of the policy. Life insurance is not a contract of indemnity because it is impossible to compensate the deceased policy holder.
Method of obtaining Life Insurance Policy:
1. Proposal form : The prospective policy holder has to fill in this proposal form, necessary information like, name, address, profession, status of health, family history etc. All the material information are disclosed. Insurance is the contract of good faith, so all the statements made must be true and factual.
2. Medical examination : The proposer is medically examined by the doctor of the corporation.
3. Proof of the age : The proposer has to give satisfactory documentary proof of age.
4. Premium : The policy holders have to pay the insurance premium, which may be monthly, quarterly, half-yearly or annually. A grace period of 15 to 30 days is allowed. Premium is payable in advance. If the premium is not paid the policy is cancelled but may be renewed.
5. Risk : After the receipt of the first premium the risk starts and continues, so far the premium are paid on due dates.
6. Acceptance of the proposal : If every thing is satisfactory, the proposal is accepted. Finally insurance policy is sent with all the terms and conditions to the insured.
