Life Insurance Policy Plans
Life insurance i.e. life insurance policy is a contract agreement made between an individual and an insurance company, in which the insurance company gives financial protection to the policyholder in lieu of premium.
On the death of the policyholder or the policy matures, then after some time the insurance company pays a lump sum amount to that person or his family. There are various types of life insurance policies available in the market according to the individual demands and needs of the policy holders.
With life insurance you can secure multiple financial goals. Life insurance plans help in meeting various financial objectives of an individual and his family. Some of the goals that a life insurance policy helps a person achieve are -
- Financial protection in case of death.
- For education for children.
- For marriage of children.
- to buy a house.
- Pension or regular income after retirement.
How many types of life insurance are there?
There are many types of life insurance. You can choose a plan according to your need -
Term Life Insurance Plan – This is a completely risk cover plan.
Unit Linked Insurance Plan – Investment opportunity along with insurance.
Endowment Plan – Insurance and Savings
Money Back – Periodic Returns with Insurance
Whole Life Insurance – Whole life coverage for the life assured
Children's plan - Life goals of children like education and marriage
Retirement Plan – Income after retirement
Term life insurance plan is the purest type of life insurance. It provides you life cover without any savings or profit elements. Term life insurance plan is the most cost-effective of life insurance as its premiums are very cheap as compared to other life insurance plans.
A Unit Linked Insurance Plan is a perfect mix of investment and insurance. A part of the premium paid for ULIP plans is used as insurance cover and a part is invested in various funds. Depending on the risk appetite of the policyholder, they can invest in various funds offered by the insurance company. The insurance company then invests the collected amount in various money market instruments like shares and equity.
Endowment plan is a traditional life insurance policy which is a combination of insurance and savings. In an endowment plan, if the life assured survives the policy term, the insurance company pays the maturity benefit to the policyholder. Also some endowment plans may offer periodic bonuses which are paid either on maturity or in case of untimely death of the policyholder.
In money back life insurance plans, a portion of the sum assured is paid directly to the life assured at regular intervals as a survival benefit. In this way the policyholder can achieve short term financial goals.
Whole life insurance plans cover the life assured for the entire life, or in some cases till the age of 100 years. At the time of purchasing a whole life insurance plan, the Sum Assured is determined. A nominee is mentioned at the time of purchase. In case of any unfortunate event, they are paid the death claim and bonus, if applicable.