Life insurance is a contract under which the insurance company undertakes to pay either a lump sum or an annuity if an event occurs involving human life, in exchange for the payment of a premium as remuneration from the policyholder for the risk taken on.
In addition to the specific risk coverage, the insurance premium includes all costs related to the acquisition and administration of the agreement (known as loadings). The parties involved in the agreement are: the insurance company, the insured party, the policy holder who pays the premium and the beneficiary who receives the payment from the insurance company. The insured party, policy holder and beneficiary may be the same person. This type of agreement can be divided into two conceptually distinct categories: policies with pure-risk cover and purely investment policies. Pension funds, on the other hand, are a specific category of insurance policies dedicated to welfare purposes, therefore ruled from case to case by the Pension and Welfare national rules and typically investing on a long-term basis.