The insurance principle of indemnity does not apply to

The insurance principle of indemnity does not apply to life assurance. Indemnity means that the insurance company will compensate the policyholder for the actual loss suffered, up to the limit of the sum insured. However, in the case of life assurance, the loss cannot be quantified in monetary terms as it is related to human life. Therefore, the principle of indemnity is not applicable to life assurance policies. In the event of the policyholder's death, the insurance company pays out the sum assured to the beneficiaries, regardless of the actual financial loss suffered. Fire insurance, burglary insurance, and marine insurance are examples of insurance policies where the principle of indemnity applies.