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Life Insurance
What is a life insurance policy?
Living a tension-free life with your beloved family is the most precious thing everybody wants. People do everything to take care of the emotional and financial needs of their loved ones. Everybody wishes that their family members stay happy, protected, and financially secure throughout their life, and tensions stay far away if anything unfavorable happens. People also try to find the best ways to invest their savings to take numerous benefits in the future.
Therefore, it is said that financial security is as important as physical and emotional well-being. To make this sure, you must take the right decisions to protect the financial future of your family in case of any unforeseen events. The future is uncertain; we do not know what the situation will be after a period of time. But, we can overcome this risk factor by taking the right decisions at the correct times.
This is where the selection of purchasing the best life insurance policy plays a paramount role. It not only acts as a tool to secure your family from any financial losses that may come up in case of an unfortunate and sudden demise but also provides you healthy leverage to enjoy financial freedom with good monetary returns. The life insurance policy chosen by you makes sure that your family is receiving timely financial help to pay off debts and meet regular living expenses. Furthermore, a life insurance plan does not hamper any kind of life goals and dreams and helps in their achievement.
In specific words, your insurance provider pays a lump sum amount to your family, in the form of insurance coverage, specified in the insurance policy. This amount is paid either to the nominee or to the insured person, in return for the premium after the completion of a specific period or in case of the death of the insured.
What do we mean by the term?
A Life Insurance Policy is a mutually decided agreement between an insured person and the insurance company, according to which the company agrees to pay the insurance coverage amount to the insured person or the nominated beneficiary, after the completion of a specific term or after the death of the insured person (whichever is earlier). In return, the insurance company asks the insured person to pay a pre-defined specific amount of money (known as the premium) at regular intervals. Additionally, this is also a better way to invest money in which the risk of death gets covered simultaneously.
In this way, a life insurance policy provides you and your family peace of mind through which you all can enjoy financial freedom.
What are the different types of life insurance plans insurance company generally provides you in our country
Money-back plans
As the name conveys the idea directly, this plan provides you the guarantee to get the stipulated percentage of the sum assured, even after the survival of the policy term period. This sum assured is returned back to the insured at pre-decided regular intervals. This is the best insurance policy if anyone wants to make a wise investment decision and wants to get avail the element of liquidity with interest.
Endowment plans
Endowment plans are a type of combination of savings and life insurance. After buying this plan you will not only receive life cover but also saving benefits. The insured will get a maturity benefit on surviving the term period of the policy. He will also get a periodic bonus (if the insurance company has declared any). Furthermore, as compared to the other insurance plans, the risk factor about the return on investment is low in the endowment plans. However, a low-risk factor also attracts a low return.
Life Insurance Term Plans
Term insurance is the most basic and the most affordable type of life insurance plan. It offers a high amount of sum assured at affordable and flexible premiums. The insurance company pays your nominee the sum assured in case of your untimely death. These plans generally tend to ask for a low amount of premiums, however, if the insured person survives the term period of the policy, then the company is not liable to pay anything to anybody. The best term insurance plan provides all-around coverage at a competitive premium.
Retirement plans
As the name suggests, these plans make your retirement life better. Retirement plans are also known as deferred pension product plans, and they provide you a pre-defined amount of pension depending upon the coverage taken by you, after the completion of the term period of your insurance policy. In case of your sudden demise, your nominated person will receive immediate payment. Otherwise, you will receive the vesting benefit continuously, on surviving the term period of the insurance policy. Generally, retirement plans provide monetary benefits in the form of monthly or annual installments (or as per the time frame decided at the time of buying the policy) or as a one-time pay-out released as soon as the insured person achieves the age of 60.
Unit linked insurance plans
Also known as ULIPs in short, is the unique insurance plan which offers you a handsome combination and dual benefit of life coverage with a great deal of investment. In this plan, a portion of your money is invested in different fund channels (such as debt, bonds, mutual funds, equity market, etc), while the rest of the money is used to provide you the life cover. This plan also pays you an amount to the nominee on your death and a maturity amount to the policyholder if he survives the term period. However, the amount of maturity is more dependent on the decisions of the investments you have taken rather than the scale of profits of the life insurer company.
Children’s plans
the basic idea behind a children’s plan is to provide financial assistance to your children. The reason behind the idea of assistance could be anything such as higher studies, business, or marriage. With a children’s plan, you also get the flexibility to invest money into various funds as per your financial condition and long-term goals. Basically, this plan acts as an instrument to generate funds for the policyholder’s child. This plan provides benefits as installments on an annual basis or issues a one-time payment once the child achieves 18 years of age. The insurer pays the immediate benefit to the nominee of the policy in case of the demise of the policyholder.
Whole life insurance plans
In this type of plan, extensive life coverage is given to the insurer till he is alive, some companies even extend this term period up to 100 years. The insurance company makes an estimate of the sum assured at the time of selling the policy. This amount is payable to the nominee after the death of the policyholder. As the name suggests, this plan provides life coverage during the whole life of the insured person.