Life Insurance
An individual’s life is full of uncertainties. Even in this advanced world technology has reduced the risk to human life, but still, there is premature death in daily life. The loss of the earning member can deal with a bad impact on the entire family. The loss is emotional as well as financial and many families fail to recover the financial impact.
What is life insurance?
Life insurance is a contract between an individual and a life insurance company under which the insurance company is legally bound to pay out an amount to the person nominated by the policyholder in the event of his/her death. The insurance company will have to honor the contract and pay the amount only if the policyholder pays all the premiums on time. The premiums can be paid as a lump sum or in equal installments, depending on the policy terms and conditions and the chosen premium payment frequency. A typical life insurance plan pays the nominee of the policyholder only after his/her death, but some policies also pay if the insured outlives the policy. There are hosts of life insurance plans available in India. Some just provide death benefits, while some offer maturity benefits along with the life insurance cover.
Types of life insurance
• Short-Term insurance plan
The simplest and the most affordable life insurance products. It guarantees the payment of sum assured in the event of the insured’s death during a fixed period. A term insurance plan terminates at the end of the tenure.
• Unit-linked insurance plan
Along with protecting the insured, Scheme also provide a host of market-linked fund options. Scheme help in channeling money into the financial markets through an array of funds. At the time of maturity, the accumulated fund value is given to the policyholder,
• Endowment plans
Also known as traditional life insurance plans, endowment plans offer an opportunity to save money along with insurance protection. Endowment plans contain certain features of both Scheme and term plans. The returns of an endowment plan are not market-linked as it guarantees fixed returns or offer additional bonuses, if any as declared by the Company that can be utilised to achieve life goals. If the policyholder survives the policy term, he/she receives the amount at maturity and in case of death; the nominees receive the death benefit.
• Whole life policy
All the life insurance policies have a fixed tenure. The whole life policy encloses the individual until the age of 100 years.
• Annuity Plans These plans are focused on people looking for a regular income after retirement. The accumulated aggregation of the policy is dispersed as a regular source of income after retirement.
