Life Insurance: What It Is, How It Works

 Life insurance is a social economic system that works on cooperation, solidarity, solidarity and interdependence among the participating members by collecting risks and redistributing them in a sound scientific system to reduce the burden of loss on the individual who is harmed.

Term life insurance

It is also a regulated means of saving that works to develop the individual’s savings. It is a system similar to an organized savings system, as the individual’s means of stopping payment of installments is linked to regulated provisions and rules, which makes these savings less vulnerable to risk. Thus, life insurance works to develop and strengthen the elements of safety and provides long-term and continuous protection. This is what makes it different from saving in banks or banks.

Permanent Life Insurance

Life insurance is medium or long-term insurance, and the duration of insurance ranges between ten years or more than thirty years. This entails the necessity for insurance companies to form reserve allocations called mathematical reserves, and these reserves in their aggregate consist of huge funds available for medium or long-term investment, therefore. Personal insurance or life insurance has economic and social importance from an economic standpoint, and the insurance sector, like banks, has huge amounts of money from the savings of policyholders, and these funds are available for investment and play an important role in the country’s economy, as policyholders’ money can be invested in many development purposes, taking into account actuarial principles. Insurance principles and investment rules. Investing these funds results in profits for policyholders that are paid to them over the insuranceperiod.

Types of Life Insurance

 These investments are the rights of policyholders and not the rights of shareholders. Therefore, the General Authority for Insurance Supervision was concerned with developing laws and legislation that regulate the foundations and investment of the insured’s funds - and clarify the investment channels that can be invested in and the percentages prescribed for each type of investment so that these funds are not exposed to the risk of loss. .

Life insurance or personal insurance works to confront inflation and the lack of purchasing power of the currency, as the profits paid to policyholders compensate the insured for the deficiency that arises from the decline in the value of the currency.