Parties to Contract

There is a difference between the insured and the policy owner (policy holder), although the owner and the insured are often the same person. For example, if Joe buys a policy on his own life, he is both the owner and the insured. But if Jane, his wife, buys a policy on Joe's life, she is the owner and he is the insured. The policy owner is the guarantee and he or she will be the person who will pay for the policy. The insured is a participant in the contract, but not necessarily a party to it.
The beneficiary receives policy proceeds upon the insured's death. The owner designates the beneficiary, but the beneficiary is not a party to the policy. The owner can change the beneficiary unless the policy has an irrevocable beneficiary designation. With an irrevocable beneficiary, that beneficiary must agree to any beneficiary changes, policy assignments, or cash value borrowing.
In cases where the policy owner is not the insured (also referred to as the celui qui vit or CQV), insurance companies have sought to limit policy purchases to those with an "insurable interest" in the CQV. For life insurance policies, close family members and business partners will usually be found to have an insurable interest. The "insurable interest" requirement usually demonstrates that the purchaser will actually suffer some kind of loss if the CQV dies. Such a requirement prevents people from benefiting from the purchase of purely speculative policies on people they expect to die. With no insurable interest requirement, the risk that a purchaser would murder the CQV for insurance proceeds would be great. In at least one case, an insurance company which sold a policy to a purchaser with no insurable interest (who later murdered the CQV for the proceeds), was found liable in court for contributing to the wrongful death of the victim.

Introduction of life insurance

Life insurance or life assurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a sum of money upon the occurrence of the insured individual's or individuals' death or other event, such as terminal illness or critical illness. In return, the policy owner agrees to pay a stipulated amount called a premium at regular intervals or in lump sums. There may be designs in some countries where bills and death expenses plus catering for after funeral expenses should be included in Policy Premium. In the United States, the predominant form simply specifies a lump sum to be paid on the insured's demise. As with most insurance policies, life insurance is a contract between the insurer and the policy owner whereby a benefit is paid to the designated beneficiaries if an insured event occurs which is covered by the policy.
The value for the policyholder is derived, not from an actual claim event, rather it is the value derived from the 'peace of mind' experienced by the policyholder, due to 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.
Insured events that may be covered include:
Serious illness: Life policies are legal contracts and the terms of the contract describe the limitations of the insured events. Specific exclusions are often written into the contract to limit the liability of the insurer; for example claims relating to suicide, fraud, war, riot and civil commotion.
Life-based contracts tend to fall into two major categories:
Protection policies - designed to provide a benefit in the event of specified event, typically a lump sum payment. A common form of this design is term insurance.
Investment policies - where the main objective is to facilitate the growth of capital by regular or single premiums. Common forms are whole life, universal life and variable life policies.

Insurance Brokers

Insurance broker represents buyer rather than a insurance company and should find a best policy for buyer in comparison shopping.A Broker of Record for you should assist you with adding new employees or terminating employees from your group plan. They should also help you claim problems, Answering employees' questions about how their plan works. Remember- Your agent is getting a commission every month from the insurance company to service your account-Make sure they are giving you the service you deserve?
Insurance Brokers represent the client, and the companies they sell for and try to find a fair balance. I am an insurance broker and know that it is not a one way street if you are a broker. I have a duty to protect the client and the insurers.

Old topics

I'm not too sure about what I said about the NAIC and Guaranty Funds (factually I'm sure but in terms of placing, relevenece I'm not). My limited time limits my contribution but I will ocme back and visit to work on it some more. Note to anyone who would like to tackle a factual information section, the insurance information institute has lots of figures and statistics, etc and could be a useful place to look. I agree that legal principle like moral hazard and adverse selection need desperatley to be tackled.
This article seriously needs input from economists and marketing people. I'll do what I can when I have the time, but it reads like a current affairs piece and doesn't contain any discussion of fundamental features of insurance markets like information assymetry, moral hazard and adverse selection and the associated marketing techniques to avoid them.
Private health insurance is a major matter only for travellers and citizens of the US. It does not deserve this much space in this article. Move it to a more specific article like US health insurance. Most people reading this are not Americans, and don't care. What you say can be said in about one paragraph on that issue.
Private health insurance is available even in (nearly all) countries with public health insurance, and is worth discussing. I do think there could be a whole article on the ethical debate.
There is plenty to talk about insurance in general, e.g . reinsurance markets for an example of how that could be structured, morbidity calculations, actuarial professions, use of insurance for portfolio management (very common as a tax planning instrument), etc.There's a lot more to be said about insurance. Also, the "abuses" section needs to be rewritten for NPOV.

Insurance is a complex and remarkably interesting subject. Someone smarter than I needs to work on this one.I have been doing some work and note the large number of modern insurance companies who evolved from such groups.

Legal Insurance not Covered

There is no mention of any kind of legal expenses insurance, legal protection insurance, defense insurance or whatever it might be called by the insurance corporation. This is a type of insurance getting more and more important for the everyday person. I am hoping that an expert in this area will step up. Thanks.

Self Insurance

Self Insurance is protection against loss by setting aside one's own money. This can be done on a mathematical basis by establishing a separate fund into which funds are deposited on a periodic basis. Through self insurance it is possible to protect against high-frequency low-severity losses. To do this through an insurance company would mean having to pay a premium that includes loadings for the company's general expenses, cost of putting the policy on the books, acquisition expenses, premium taxes, and contingencies.
I believe this definition is too restrictive as follows:
Many entities that self insure do not "set aside" any money at all
Separate funds are, I think, less common than separate accounts or registers
I do not believe the word "protect" is apropos. The net risk position of the entity does not change if it declares itself "Self insured."
While insurance contains the frictional costs enumerated, self insurance contains implicit costs that may be similar, e.g., administation and payment of internal claims, implicit capital charges that result where the liquidity position of the entity alters to match the volatility introduced by the decision to self insure
There is also a distinction that should be recognized between voluntary self-insurance (the entity could purchase insurance and chooses not to) and involuntary (insurance is not available in type or amount satisfactory to the entity). In some sense everyone 'self insures' because they are unable to purchase unlimited protection in areas where unlimited exposures exist (e.g., general or personal liablity)
The following would be my rewrite. Comments, please?
Formal Self Insurance is the deliberate decision to pay for otherwise insurable losses out of one's own money. This can be done on a formal basis by establishing a separate fund into which funds are deposited on a periodic basis, or by simply forgoing the purchase of available insurance and paying out-of-pocket. Self insurance is ususally used to pay for high-frequency, low-severity losses. Such losses, if covered by conventional insurance, mean having to pay a premium that includes loadings for the company's general expenses, cost of putting the policy on the books, acquisition expenses, premium taxes, and contingencies. While this is true for all insurance, for small, frequent losses the transaction costs may exceed the benefit of volatility reduction that insurance otherwise affords.

Glossary

Combined ratio = loss ratio + expense ratio + commission ratio. Loss ratio is calculated by dividing the amount of losses (sometimes including loss adjustment expenses) by the amount of earned premium. Expense ratio is calculated by dividing the amount of operational expenses by the amount of written premium. A lower number indicates a better return on the amount of capital placed at risk by an insurer.