Life insurance is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of an insured person.

Life policies are legal contracts and the terms of each contract describe the boundaries of the insured events. Often, specific exclusions written into the contract limit the liability of the insurer; common examples include claims relating to suicide, fraud, war, riot, and civil commotion. Difficulties may arise where an event defined vaguely.

Modern life insurance bears some similarity to the asset-management industry and life insurers have diversified their product offerings into retirement products such as annuities.

Life-based contracts tend to fall into two major categories- protection policies, which are designed to provide a benefit, typically a lump-sum payment, in the event of a specified occurrence; and investment policies whose main objective is to smooth the progress of the growth of resources by regular or single premiums.