Life insurance and its risks on the insurer and the insured

So the proposed insurance product will help them to not lose this retirement opportunity.

I think you are talking about a whole life insurance. This product combines insurance against the risk of death with a retirement savings vehicle.

What are the risks that the insurer face when buying the product?

I think you mean "selling" here. The insures sells the product, the insured buys it. There is very little risk for the insurer. In fact insurance love to sell whole life since it's very profitable for them. The death risk is easily managed with statistics over a large enough pool of insured people. The savings part is great for the insurance since the effective rate to the client is typically abysmal. If the insured goes bankrupt and stops paying the premiums, the insurance simply cancel the policy and does a meager payout of the accumulated money.

What are the risks that the insured face by signing an insurance contract?

Financially its a very bad decision since the rate of return of whole life insurance is often terrible. There is absolutely no reason to mingle retirement savings with death risk management. Get a term life insurance for the latter and there are plenty of good options for the former, many of which offer tax advantages so the government helps saving.