Types of Life Insurance?

Meaning: -Under Life Insurance contract, the human life is insured against death, old age, sickness, accident etc. Life Insurance contract is not a contract of indemnity. Therefore, the insurer has to pay a definite sum on the maturity of the policy. The sum has to be paid after the death of insured or at the expiry of the term.

Life Insurance is not for the person who passes away, but it is for those who survive. It is the responsibility of every member to guard against the events that could affect the family in the unfortunate circumstances of his demise. Thus, having a Life Insurance policy is very vital.

Definition: - Life Insurance can be defined as "A contract where an insurance company undertakes the consideration of regular payment of premium to pay certain sum of money to the assured on maturity of policy or death, whichever is earlier".
Types of Life Insurance Policy:

1.       Whole Life Policy: -The whole life of a person is insured under this policy. The insured cannot receive the money from the insurance company till he is alive. The rate of premium is normally very low. The money becomes payable on the death of the insured person to the nominee or the legal heir of the deceased policy holder.

2.       Endowment Insurance Policy: -Under this policy, insurance is taken for a specific period. The sum assured along with bonus is given on his death to the dependents of family or on the expiry of the specific period; the insured himself receives the sum assured along with bonus. It is a popular plan as it protects the family of the deceased or provided old age pension to the insured.

3.       Term Insurance Policy: -Term insurance policy is taken for a specific period. It has lowest premium among all Insurance plans. Premium is fixed and does not change during the term of the policy. In case of an untimely death, the dependents will receive the benefit amount specified in the term life insurance agreement.

4.       Money-Back Policy: -Money-back policy provides a regular percentage of the sum assured during the life time of the policy and also guarantee the benefit of full sum assured in the event of the death of the insured to the dependents of the family. This policy is for those people who like to have savings and Insurance Cover.

5.       Joint Life Policy: -Under Joint Life Policy, two or more persons are jointly assured. The person who takes joint life policy must have insurable interest in each other. It is useful for individuals having common interest, requiring joint safety and security to their lives. It can be taken by the partners of the firm or husband and wife.

6.       Annual Policy: -The insured has to pay the premium in lump sum or installments over a certain period of time. The insured will receive back a specific sum periodically from a specified date onwards, either for life or for a fixed number of years. Generally, life annuity (pension) is opted (choose) by a person having surplus wealth and wants to use this money after his retirement.   

7.       Pension Plan Policy: -Pension policy is different from all other forms of life insurance, as it does not provide any life insurance cover but merely offers a guaranteed income either for a life or for a certain period. (therefore, this type of insurance is taken so as to get income after retirement)

ULIP (Unit Linked Insurance Plans): -ULIPs is introduced by the private companies and are very popular as they combine the benefits of life insurance policies with mutual funds.  

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