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...... [$rainbow GIF] WM. Baker Associates'
LIFE INSURANCE HOME PAGE
LIFE INSURANCE - WHAT IS IT?
Published by Bill Baker, J.D.
  The purpose of this page is to provide visitors
with a working definition of life insurance

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Life insurance is a contract where a premium is paid
to the insurance company by a party having an insur-
able interest in the life of the insured in return for the
insurance company's promise to pay the beneficiary
a defined amount upon the death of the insured.

Specifically, life insurance is an aleatory conditional
unilateral
contract.

A Life insurance contract is aleatory in that the obliga-
tion of the insurance company to pay the beneficiary is
conditioned upon the occurrence of an uncertain event;
namely the death of the insured. This uncertainty creates
an element of chance wherein one party to the contract
may receive much more in value than he or she gives
under the contract.

Life insurance is conditional in that the insurance com-
pany's obligation to pay a claim is dependent upon the
performance of certain acts by the insured (i.e., paying
the premium, furnishing proof of death to the insurance
company by the beneficiary, etc.).

Life insurance is unilateral in that it contains an enforce-
able promise of only one party; the insurance company.
The owner of the life insurance contract does not make
a promise to pay the premiums on the policy. However,
once the policy is underwritten and issued, if the prem-
iums are paid, the insurance company must accept them
& meet its obligations under the life insurance contract.
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