CHAPTER I
FUNDAMENTAL NATURE OF LIFE INSURANCE

INSURANCE is indemnity. The earliest type of this is the bond of indemnity. A surety was the first insurer and the principal in the bond the first insured. Notwithstanding which, the giving of bonds by a corporation for the consideration of a premium is one of the most recently introduced forms of insurance.

It follows, therefore, that the issue of a policy promising to pay money upon the happening of a named event, which is contingent only and may or may not happen, is or is not insurance, according as the beneficiary of the policy would or would not be a loser by the event in an amount not less than the sum insured. Insurance can only indemnify against loss; more than this is gambling.

This may be put another way which will perhaps make the distinction between speculative or gambling policies and insurance yet plainer. We are, in the nature of things, subject to perils, arising out of the conditions of human life.

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