The word policy has been derived from the Italian word “Polizza”. An Insurance policy is a formal document which is a proof of the contract of insurance which has come into existence between the parties. The insurer is duty bound to issue a policy in which the details of the contract is expressed in full.
The features of the policy along with the rates, advantages, terms and conditions issued by the insurer must be accepted by the Controller of Insurance. In US too, the terms and conditions of the policy are subject to approval of the Commissioner. These are made primarily to enhance the comfort level of the policy holders. Further, an insurance policy is drafted in a language selected by the insurer and it must either be accepted or rejected by the insured person having no chance to put a counter offer or bargain with respect with the terms and conditions as prescribed in the policy. Thus, a life insurance contract is also termed as a contract of adhesion.
