Life insurance defined

Section 2 (11) of the Insurance Act 1938 (of India) defines “life insurance business” as follows:

“Life insurance business means the business of effecting contracts of insurance up on human life, including any contract whereby the payment of money is assured on death (except on death by accident only) or the happening of any contingency dependent on human life, and any contract which is subject to payment of premiums for a term dependent on human life and shall be deemed to include --

 (a)  the granting of disability and double or triple indemnity accident benefits, if so provided in the contract of insurance,

   (b) the granting of annuities up on human life; and

  (c) the granting of superannuation allowances and annuities payable out of any fund applicable solely to the relief and maintenance of persons engaged or who have been engaged in any particular profession, trade or employment or of the dependents of such persons”.

Explanation: For the removal of doubts, it is hereby declared that “life insurance business” shall include any unit linked insurance policy or scrips or any such instrument or unit, by whatever name called, which provides a component of investment and a component of insurance issued by an insurer referred to in clause (9) of this section. This explanation is inserted in the Act after section 2(11) through an amendment of the insurance Act, 1938 brought about through The Securities and Insurance Laws (Amendment and Validation) Act, 2010.

This seems to be a long definition. But try to understand it by splitting it in to small pieces. Please note that a contract of insurance covering “death by accident only” is not life insurance. It is the area of general insurance. You know that General insurance companies have personal accident policies. However, in a life insurance policy accident benefit can be given as an additional benefit.

Key words:

Life insurance definition
The Insurance Act, 1938
The Securities and Insurance Laws (Amendment and Validation) Act, 2010
Life insurance business