What are Insurance Companies?

Insurance companies are corporate entities that sell protection policies to their clientele from
potential misfortunes. Some insurance companies specialize in one type of insurance; others sell several
kinds. Some companies, in fact, specialize exclusively in writing custom insurance policies for unusual
insurance requests. No matter what type they are, however, all insurance companies operate in a
relatively standardized manner.

How Do Insurance Companies Work?

Insurance companies work by following some relatively simply guidelines. Insurance companies
underwrite policies for their clients in which they agree to pay a certain amount of money to their client
in the event of a loss. For instance, a car insurance company will underwrite policies that state that it
will reimburse its client in the event that the client's car is stolen or destroyed in an accident. In return,
the client agrees to pay recurring premiums--a fancy word for payments--to the insurance company on a
regular basis, often monthly or yearly. The insurance company collects its premiums from all clients,
invests that money in extremely safe investments, such as government bonds, and keeps capital on
hand to pay claims made by its clients.

Why are Insurance Companies Important?

First, insurance companies help to insulate any one individual from a catastrophic loss. By everyone
paying into a collective home insurance company, for instance, one person is protected from a freak
accident in which his home is destroyed. Insurance is extremely important not only for individuals but
also for businesses. Certain industries, such as health care or trucking, just wouldn't be able to function
without an insurance company system to help spread liability and cost out evenly across all interested
parties.

MetLife, Inc. is the holding corporation for the Metropolitan Life Insurance Company, commonly known
as MetLife. The firm was founded on March 24, 1868. For most of its life the company was a mutual
organization, but it went public in 2000.

MetLife is the largest life insurer in the United States, with more than $3.3 trillion of life insurance in
force. A leader in savings and retirement products and services for individuals, small business, and large
institutions, MetLife serves 90 of the largest Fortune 100 companies.

American International Group, Inc. (AIG), a world leader in insurance and financial services, is the
leading international insurance organization with operations in more than 130 countries and
jurisdictions. AIG companies serve commercial, institutional and individual customers through the most
extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG
companies are leading providers of retirement services, financial services and asset management
around the world. AIG's common stock is listed on the New York Stock Exchange, as well as the stock
exchanges in Paris, Switzerland and Tokyo.
American Life Insurance Company (ALICO), incorporated in Delaware U.S.A in 1921, is one of the largest
international life insurance companies in the world, with more than US$294 billion of life insurance in
force as of December 31, 2006.

ALICO's branches and subsidiaries market a wide range of life and health insurance products. These
products include traditional life insurance, variable universal life insurance, credit life insurance,
supplemental medical and personal accident products, health and hospitalization insurance, group life,
pensions and annuities, through a network of some 35,000 agents. ALICO conducts business globally in
Japan, Europe, the Middle East, South Asia, Latin America, and the Caribbean in more than 55 countries.

ALICO Bangladesh is the oldest operation in the company's Middle East, Africa and South Asia (MEASA)
division tracing its origin back to 1952 when it entered Pakistan with business activities also extending to
erstwhile East Pakistan. The company started full service branch operation in Bangladesh in 1974 and
has since been marketing individual and group life insurance products with remarkable success.

ALICO plays an important role in the economy of Bangladesh. Its assets in Bangladesh currently exceed
Tk. 2100 Crore with more than 476,500 life insurance policies in force. Besides with more than 6,500
career agents and more than 231 dedicated employees, ALICO is a major employer in the country.

Life insurance is a form of insurance that pays monetary proceeds upon the death of the insured
covered in the policy. Essentially, a life insurance policy is a contract between the named insured and
the insurance company wherein the insurance company agrees to pay an agreed upon sum of money to
the insured's named beneficiary so long as the insured's premiums are current.

People take out life insurance policies for a number of reasons. Such insurance provides security to family
members upon the loss of a loved one. For instance, if the primary wage earner dies in his or her prime,
the death benefit received from a life insurance policy will assist the surviving family members in
overcoming the burden of the tragic loss. Life insurance can be purchased by individuals, but is also
offered as a perk by many employers. Often times, large employers and government employers offer
group life insurance at no cost to the employee. Should the employee wish to obtain additional life
insurance from the employer's insurance company, they can usually do so at reduced rates.

The cost of life insurance varies depending on such factors as the insured's age, health, and occupation.
For example, the premium for a 25-year-old, male, non-smoker in excellent health will be far less
expensive than a similar policy for a 65-year-old male smoker. Similarly, a sky dive instructor would
have to pay much higher premiums for life insurance than would a librarian.

Life insurance is available in a number of different forms to fit the tastes of the proposed insured. Some of
the typical forms of life insurance policies include: whole life, variable life, and term life. Term life
insurance policies begin with low premiums during the initial stages of the policy and these premiums
increase steadily as the insured grows older. There is no cash build-up in a term policy and, accordingly,
the death benefit will not increase.

With whole life and variable life insurance, a portion of each premium pays for the insurance and the
remainder serves as a tax-free investment. A whole life policy sets a premium at the beginning of the
policy and that premium does not change over the life of the policy. This form of insurance allows for a
cash build-up during the insured's life. This cash build-up can be used during the course of the policy or it
will simply serve to increase the death benefit in the end.