Insurance is a contract under which the insurer promises to provide economics and social security in consideration of premium payment by the assured. Consideration is an essential element of a legal contract. It is a first condition of a policy to pay insurance premium in advance. The insurer creates a fund known as “Life Fund” with premium received from assured. This fund is used to pay the claims on happening of any future event. Premium is known as a payment given by the insured to insurer in lieu of life insurance. Premium is a consideration for accepting the risk by insurer under life insurance. This consideration being premium may be paid to the insurer in lamp sum, in annual installments throughout life or up to insurance duration or till the predecided time duration. The insurer, in the calculation of premium assumes that the payment of on the basis of being annually. But to give relief to the insured in payment of premium, the calculation is also done for half-yearly, quarterly and monthly installments.