What is Life Insurance?
Life insurance is an insurance branch. Its main subject area is human life and it allows people to take measures against risks that will arise during a lifetime and, for that reason, there are many types.
The purpose of life insurance is to provide financial support in the event of unexpected events in life (e.g., in the event of disability of the person directly or in the event of death of legal heirs), as well as a certain amount of savings in the period of retirement income. For these reasons, life insurance is divided into two groups; cumulative and noncumulative. A person will receive both the benefits and savings in the case of cumulative life insurances, and only the benefits in the case of noncumulative.
Life insurance is an insurance that provides solutions to financial problems that arise as people face various possibilities, such as death, disability or living to be quite old.
From the perspective of human life, what a person faces is either an untimely death or living a very long life. If a person reaches an unemployable age without securing financial means, a long life will only mean trouble for that person.
The main reason life insurance exists is to provide the insured with the means to survive without lowering quality of life in the period of retirement or in the event of disability or death to dependent family members.
From the point of view of society, life insurance is a social tool through which a person or a group transfers the financial risks related to their lives. As a result of these transfers, a fund gets accumulated. This definition has two elements. One is the transfer of the risk from a person to a group or a set of groups, and the second is sharing the risk among the group members.