Parties to the contract of insurance

The Insurer is the party who assumes or accepts the risk of loss and undertakes for a consideration to indemnify the insured or to pay him a certain sum on the happening of a specified contingency or event.  The business of insurance may be carried on by individuals just as much as by corporations and associations.  The state itself may go into insurance business.

The insured, or the second party to the contract, is the person in whose favor, the contract is operative and who is indemnified against, or is to receive a certain sum upon the happening of a specified contingency or event.  He is the person whose loss is the occasion for the payment of the insurance proceeds by the insurer.

Is the insured always the person to whom the proceeds are paid?

No.  The person paid may be the beneficiary designated in the policy.  A common example of this situation is a life insurance policy where the proceeds are not given to the insured but to a third party designated by the insured.

What is the nature of the relationship between the insurer and the insured?

It is that of a contingent debtor and creditor, subject to the conditions of the policy and NOT that of trustee and cestui que trust.