Life Insurance provides
financial security to the family in case of death of the insured. Most of them
have become aware of the importance of Life Insurance. There are lots are
people who are not aware of different types of Life Insurance available in
India.
Mainly there are two
categorizations of Life
Insurance Plan. They are the Term Life Policy Plan
and the other is the Traditional Whole Life Policy Plan. Whole Life Policy is
usually till 100 years of age or till the insured stays alive, so thecompany
will have toprovide the maturity benefit, else death benefit if dies during tenure.
Apart from this, there
are many classifications of plans which are as detailed below:
1)
Term Insurance:
This
is a death risk cover plan which offers a higher sum assured with fewer premiums
in case of death of the insured. But if one outlives the policy term, then nothing
will be provided to the insured.
2)
Whole Life Policy:
This
policy covers the whole life, which is usually up to 100 years. After
completion of the premium payment term, a certain sum assured is given to the
insured.The premiums are comparatively higher than term plan.
3)
Endowment Plan:
If
insured outlives the tenure, then maturity benefits will be provided along with
the bonus. But if insured dies during the policy period, a sum assured is given
to the family member.
4)
Unit Linked Insurance Plan or ULIP plan:
This
is purely a market-linked plan. Here the company invests in the equity market.
Thus the maturity amount received is solely based on market performance. They
have surrender values, loan values and paid-up values.
5)
Money Back Policy:
This
plan is similar to the endowment plan except that it offers a portion of the
sum assured at regular intervals. If insured dies during the life insurance
policy term, the entire amount of sum assured is given to them. If they survive the policy term, they receive
the balance sum assured. Anyone in need
of periodic payment should opt for this policy. The tenure for Money Back
Policy is long usually up to 20, 25 or 30 years.
6)
Child Plan:
Child
plan or children plans are investment and insurance plan which finances for
children’s future taking into considerations essential parts of their lives
like a child’s education, marriage, etc. It is beneficial to the child if the parents
reach a certain age. In a few of the children's plan, the amount is waived off
in case of a parent's death, but still, the policy continues. Also, most of the
policy offers one-time payout or annual installments once the child turns 18.
7)
Annuity Plan or Retirement Plan or
Pension Plan:
An
annuity plan is a long term plan. In this plan, a certain contribution is
required as a single premium or regular payment which can be used as a periodic
payment after the retirement. The premium amount payable should be large as it
could provide higher income in the future. Taking into consideration all the
expenses and loans like home loan, car loan, etc. the premium amount should be
decided to get the required premium amount.
It
is essential to choose a Life Insurance plan by doing a thorough investigation
to avoid any doubts during receiving of maturity amount or sum assured. This
one decision of purchasing the right planwill decide our family’s future and
thus ensure that they stay safe and enjoy financial freedom.
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