Life Insurance


Life Insurance:

Life insurance Policy is a contract between insured and the life Insurance Company (insurer) for the specified period of time (term) to protect your family against financial risk of your life to the extent of the life coverage (sum assured) by paying a cost (premium) to the life insurance company.

Life insurance is a must for the bread earner of the family, who has dependents. In case of an uncertain death of the bread earner it pays a lump sum amount to the nominee of the life insurance policy, so that the family can continue with the same standard of living even after losing him. Basically we can say life insurance covers the risk of death.

Types of Life insurance Policies:

Term Life insurance Policy

It is a pure life insurance cover policy. This policy pays the sum assured only in case of death during the term of the policy. It does not have any investment factor and thus nothing is paid on maturity of the policy. Term insurance policies are cheapest of all the life insurance policies. Nowadays, Online term insurance policies are available in the market, which are relatively cheap as compared to the Offline term insurance polices.

Endowment Policy

It is a savings cum insurance policy. This policy pays the sum assured on death or maturity of the policy, which ever is earlier. Life insurance Company invests the saving portion of the premium as per insurance act. The reversionary bonuses are added every year depending on profits of the company.

Money Back Life insurance Policy

It is a savings cum insurance policy, which provides a regular payment as a fixed percentage of sum assured at specified intervals during the term of the insurance policy. These are known as survival benefit. On death during the term of the policy, the nominee is paid the basic sum assured and even survival benefits paid during regular intervals are not deducted while calculating the death claim payable.

Whole Life insurance Policy

It is a savings cum insurance policy, which has a life cover till lifetime i.e. till 100 years of age. You have to pay premiums only for a specified term but the life insurance cover continues for lifetime.

Unit Linked Policy

ULIPS are market linked insurance plans where the investment risk is borne by the policyholder. It is an investment cum insurance policy, where you have an option to choose out of different funds, where you would like to invest the premiums. The different types of funds are Liquid Funds, Bond Funds, Balanced Funds and Equity Funds etc. You can also choose the proportion of investment in the different funds. These plans carry charges like premium allocation charge, policy administration charge and fund management charges etc. All kinds of life insurance policies like child plans, endowment plans and pension plans are available as ULIPs.

Children Policy

These are savings-cum-life insurance policies, where the policyholder is the parent and the beneficiary is the child. So that in case of the death of the parent, in most policies the premium payment is waived and then all the benefits are paid as it is as promised in the policy. In case if the parent is alive, the sum assured along with the accrued bonus is paid. These plans are available in the form of traditional plans as well as ULIPs.

Pension Policy

These policies are targeted to create retirement corpus. This plan is offered both with life cover and without life cover. Premiums need to be paid for a specified term generally till your retirement. At the end of the term depending on the funds accumulated during the premium paying term, a fixed amount is paid to the policyholder throughout the life as pension / annuity. In case of death during the term of the policy, the paid up value is paid. These plans are available in the form of traditional plans as well as ULIPs.

Riders

Riders are an additional benefit that can be bought while buying the life insurance. It is not compulsory to add riders to your life insurance policy. You can take a rider benefit sum assured depending upon your basic sum assured and the premium of the policy. These riders are available with all types of life insurance plans. Some of the common riders available with most of the life insurance policies are critical illness, Accidental Death, Accidental Death and Disability, Waiver of premium, etc.