Another kind of contract, life insurance in reverse, as it were, known as an annuity, is also offered by insurers on payment in advance of a sum of money to purchase the provision of an income during the lifetime of the person covered.
This enables people to provide for their old age when they can no longer earn.
It is true that the state, as part of its social security scheme, pays retirement pensions to all who have made the necessary compulsory contributions, but these pensions are at a comparatively low level and many employers pay for additional pensions, known as occupational pensions, which are often provided by insurance companies.
People who work on their own account, such as professional men and women, can also buy pensions by paying premiums to an insurer during their working life. The state encourages people to provide for themselves through life and pensions insurance by relieving them in part or in whole of income tax on the premiums they pay.
One kind of insurance - on lives - is different from any other in that it provides for the payment of a sum of money on the death of the person insured.
Death differs from, say, a fire or a burglary in that it is certain to occur sooner or later.
In the sixteenth century people could only insure their lives for short periods, as when they were going on a voyage, and the insurance was very expensive.
Two hundred years later ingenious mathematicians devised what is known as whole life insurance.
In this the annual premium of a level amount is payable each... see: Life Insurance
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