An insurance is a legal contract between a person who wants financial protection and the company which agrees to provide the coverage. According to the contract, in case of life insurance, the insured or the policy holder agrees to pay a certain amount of money, also known as premium, to the insurer or the insurance company. This is done in lieu of a definite sum given by the company to the family members of the policyholders on his untimely demise. The contract can include other contingencies also like critical illness, permanent or temporary illness.
The premium amount that the insured needs to pay to the insurer is decided by the insurance company on the basis of different factors. The insured can choose the term for the plan and also the sum assured for his/her family in case of his untimely demise.