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Life insurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a amount of money upon the happening of the insured individual's or individuals' death or other event, like terminal illness, critical illness. In return, the policy owner agrees to pay a fixed amount called a premium at regular intervals or in bulge sum. There may be designs in some countries where bills and death costs; catering costs after funeral costs should be included in Policy Premium. In the U S, the predominant form simply specifies a bulge sum to be paid on the insured's demise.
Like other insurance policies, life insurance is also a contract between the insurer and the policy owner whereby a benefit is paid to the nominated beneficiaries if an insured event occurs which is covered by the policy. The assessment for the policyholder is derived not from an actual claim event. But to a certain extent it is the value derived from the 'peace of mind' experienced by the policyholder, because of the negating of adverse financial consequences caused by the death of the Life Assured. To be a life policy the insured event must be based upon the lives of the people named in the policy.