Permanent life insurance

Permanent life insurance is a form of life insurance as any life or endowment funds, where the policy is for the life of the insured, the payment is fixed at the end of the policy (assuming the current policy is maintained) and the policy cash value accumulates.
This compares with the term life insurance, where insurance is purchased for a specified period (usually one year, or during periods of level such as 5, 10, 15, 20 and even 25 to 30 years), a death benefit will be paid to the beneficiary if the insured dies during the period of time.

Definition of "life insurance"

*** A policy with a term limit on the coverage period. Once the policy has expired, is the owner of the police to decide to renew the life insurance contract or leave the final cover. This type of insurance policy contrasts with permanent life insurance, which prolongs until the policyholder reaches 100 years of age (ie death).

*** These policies provide a benefit shown on the death of the insured, provided death occurs within a specific timeframe. However, the policy does not provide benefits beyond the stated benefit, unlike permanent life insurance with a savings component that can be used for the accumulation of wealth.

Nature of life insurance contract

Life insurance contract may be defined as the contract, whereby the insurer in consideration of a premium undertakes to pay a certain sum of money either on the death of the insured or on the expiry of a fixed period. The definition of the life insurance contract is enlarged by Section 2(ii) of the insurance act 1933 by including annuity business. Since, the life insurance contract is not an indemnity contract; the undertaking on the part of the insurer is an absolute one to pay a definite sum on maturity of policy at the death or an amount in installment for a fixed period or during the life.