The life insurance contract is based on the notion of hazard characterized by the uncertainty of the insured’s human lifespan.
As a result, the subscription can only be made by a natural person.
Briefly, this is a convention that typically involves three people in a financial transaction:
1. an insurer.
2. an insured.
3. and a beneficiary.
It allows the policyholder to save money from an organization (the insurer) for the purpose of passing it on to one or more designated persons (the beneficiary) when a particular event related to the insured occurs, such as his or her death.
However, the policyholder is not necessarily the insured: anyone can take out a life insurance policy whose hazard is based on a different person.
The policyholder is the one who pays the contributions while the insured is the person on whom the hazard is based.
On the other hand, the beneficiary is designated by the policyholder, not by the insured if it is a different person.
He does not have to be present when signing the contract.
Specifically, this savings contract creates bonds for each of the parties.
The insured entrusts his savings to his insurer for a certain period of time by paying premiums on a contract.
These savings will constitute interest that will then be taxable in the event of withdrawal. In return, the insurer undertakes:
1. Either to return the savings in the form of capital or annuity to the insured himself when he requests it: insurance in case of life;
2. Either to pay it to the designated beneficiary in the event of a particular event on the insured’s person, thus playing the beneficiary clause: insurance in the event of death.
The two types of the denouement of the life insurance policy guarantee the payment and release of the savings.