In term life policies, the risk relates to the life of the insured and is entirely taken over by the company.
The insurance company agrees to pay to the beneficiaries an amount of compensation as defined at the time of subscription. The monthly or annual premium payment depends age, health and the level of cover.
The term life policy offers two options for payment of compensation:
1) Compensation is paid to the beneficiaries on the death of the life assured.
2) Compensation is paid to the beneficiaries on a set date irrespective of the death of the life assured.