Individual Life insurance is a contract between a life insurance policy holder and an insurer(company) where the policy holder makes payments(premiums) to the insurer for a certain period, and the insurer promises to pay a certain agreed sum of money to a designated beneficiary e.g. a child, a spouse, a relative etc. when the event insured against occurs. The core purpose of life insurance is to protect the insured’s family from financial strain if and when an unfortunate event occurs e.g. death, disability.
Payments can be made in different frequencies e.g. monthly, quarterly, semi- annually, annually or a one of payment known as a single premium, depending on the product purchased.
Individual Life assurance policies can either be:
Protection policies: These pay a benefit upon occurrence of a certain event e.g. death, disability, critical illness, where applicable.
Investment policies: Here the main objective is to facilitate growth of capital for a future need e.g. buying a home, financing a wedding etc.