Life Insurance Protection is a contract between the Insurer and the Policyholder. In this contract, the Insurer promises the Policyholder that it will pay a fixed amount to his Nominee in case of his death or the occurrence of a particular event. In return, the Policyholder has to pay premiums regularly. It is a means of Financial Security that provides Financial Support to the Family in unexpected circumstances.

In simple language, you can understand it like this that Life Insurance Protection is an agreement in which you deposit a small amount in the form of Premium to the Life Insurance Company. In return, the Insurance Company promises that if you die, it will pay a pre-determined amount to your family. With the help of Life Insurance Protection, you can secure your family financially.

The Insurer is the company or organization that provides Insurance Protection. This company receives a fixed amount from the Policyholder in the form of Premium and Promises that if the Policyholder faces any loss, accident or death in the future, then it will pay a pre-determined amount to the Policyholder or his Nominee. The main function of the Insurer is to Protect the Policyholder from Financial Losses due to various types of Risks.

A policyholder is a person who has bought an Insurance Policy. This is a person who contracts with the Insurer and Regularly pays a pre-determined amount in the form of Premium. In exchange for this Premium, the Policyholder gets the benefit of Insurance Protection and Financial Protection from the Insurer in case of occurrence of a particular event (eg: death, accident or illness). For example, if you have bought a Life Insurance Policy then you are a Policyholder.

The Insured is the person in whose name the Policy is issued and who is entitled to receive the protection and other benefits of the Insurance Policy. The insured or the nominee decided by him receives the benefit of Financial Security against various types of risks available in the Insurance Policy.

The Life Insured is related to the person for whom the Insurance Policy is Purchased to provide Financial Security against the risks to his Life or Health. If any untoward event (eg: death or serious illness) happens to the Insured Person, then the insurance company provides financial assistance to him or his nominee as per the Insurance Policy.

Example: If you buy a Life Insurance Policy in your name, then you will be called the Life Insured for that Life Insurance Policy. This means that if your death or any other specified event occurs, then the Insurance Company will pay the insurance amount to you or your nominee.

Generally people consider Policyholder, Insured and Life Insured to be the same, but in reality it is not so. Although all three are related to the insurance policy, yet the roles of these three can be different. Let us understand the difference between them:

Policyholder:

• The Policyholder is the person who buys an Insurance Policy from the Insurer and enters into an Insurance contract with him.
• The Policyholder is the person who pays the Premium as per the terms and conditions of the Insurance Policy.
• If you buy an Insurance Policy for yourself, then you are both the Insured and the Policyholder of that Policy. But if you buy an Insurance Policy for another person, then you are called only the Policyholder for that policy.

Insured:

• The Insured is the person who gets Insurance Protection in the Insurance Policy.
• If an accident, illness or death happens to the Insured, the Insurance Company pays the sum insured as per the policy terms.
• In an Insurance Policy, the Policyholder and the Insured can be the same person, but in some cases they can be different persons.

Life Assured:

• Life Assured is basically related to Life Insurance Policy. The person in whose name a Life Insurance Policy is purchased is called the Life Insured.
• In case of Life Insurance Policies, the Life Insured and the Insured are the same person.

An Insurance Policy is a legal document, which contains the contract between the Insurer (Insurance Company) and the Policyholder. This legal document contains a detailed description of the terms and conditions on the basis of which the Insurer Provides Financial Protection to the Policyholder.

In the Insurance Policy, it is decided how much Premium the Policyholder will have to pay to avail the benefits of Insurance Protection. Under what circumstances will the Insurer pay how much money to the Policyholder or his Nominee and what kind of Insurance Protection benefits will be available. Such as: Life Insurance, Health Insurance, Vehicle Insurance, etc.

In Life Insurance Policies, the Premium is related to the amount that the Policyholder pays regularly to the Life Insurance Company, so that the Life Insurance Company can provide Life Insurance Protection to the Policyholder in return for this Premium. There can be many methods of Premium Payment in an insurance policy. Such as: monthly, quarterly, half-yearly, yearly or single.

The basic purpose of paying the Premium is that the Policyholder's Life Insurance Policy remains active and if the Policyholder faces an accident, death or any other incident, then the Insurance Company should pay the Insurance Amount to him or his nominee.

Example: Suppose you have purchased a Life Insurance Policy worth Rs 10 lakh for 20 years from a Life Insurance Company. Suppose the Insurance Company demands a monthly Premium of ₹8315 from you for this policy. So now you will have to pay ₹8315 per month to the Life Insurance Company for the next 20 years. Your monthly premium for this Life Insurance Policy will be ₹8315.