Legal Definitions - insurance of the person

Insurance of the person refers to a category of insurance policies designed to protect individuals and their beneficiaries from financial losses arising from events that directly affect a person's life, health, or ability to earn an income. Unlike property insurance, which covers physical assets, or liability insurance, which covers harm caused to others, insurance of the person focuses on the human element, providing financial security in the face of personal misfortunes such as illness, injury, disability, or death.

• Example 1: Life Insurance

  A young couple with two small children purchases a life insurance policy for each spouse. If one parent were to tragically pass away, the surviving parent and children would receive a significant payout from the insurance company. This payout is intended to replace the lost income, cover funeral expenses, and ensure the family can maintain their standard of living and future plans, such as college savings.

  This illustrates "insurance of the person" because the policy provides financial protection against the ultimate personal event: the death of an individual. The benefit is tied directly to the life of the insured person and aims to mitigate the financial impact of their absence on their dependents.

• Example 2: Health Insurance

  An individual working for a company enrolls in their employer's health insurance plan. Later that year, they experience a sudden medical emergency requiring an appendectomy and a short hospital stay. The total cost of the surgery and hospital care is substantial, but their health insurance policy covers a large percentage of these expenses after a deductible is met, leaving the individual responsible for a much smaller co-payment.

  This demonstrates "insurance of the person" because the policy covers financial risks related to the insured individual's health. It protects against the high costs associated with medical treatment, illness, and injury, ensuring access to necessary care without devastating personal financial consequences.

• Example 3: Disability Insurance

  A self-employed graphic designer relies entirely on their ability to work to generate income. Concerned about potential unforeseen circumstances, they purchase a long-term disability insurance policy. Several years later, they develop a severe hand injury that prevents them from using a computer mouse or drawing tablet for an extended period, making them unable to perform their job duties. Their disability insurance policy then begins to pay them a regular monthly income, replacing a portion of their lost earnings while they recover.

  This exemplifies "insurance of the person" because the policy protects against the financial loss resulting from the insured individual's inability to work due to illness or injury. The coverage is directly linked to the person's physical and mental capacity to earn an income, providing crucial financial stability when that capacity is compromised.