Life Insurance
Life Insurance is a written agreement between a person (insured) and an insurance company, according to which the company promises to pay a predetermined amount to his beneficiary on the death of the person, instead the person has to pay a regular premium Other events, such as serious illness or disability, may also lead to payment of funds Many life insurance polices also have the option of investing.
What financial goals can you secure with Life Insurance?
Life Insurance helps a persen to meet their goal. The following goal can be meet :
- Financial Protection in Case of Death (Economic Security)
- Education for Children (Education)
- Marriage of children
- Buying a house/owning
- Pension or regular income after retirement
What are the different types of Life Insurance?
1. Term Life Insurance Plans
Term life insurance plan is the purest form (pure type) of life insurance. It provides you with life cover without any saving or profit element(s). Term life insurance plan is the most economical type of life insurance as its premiums are much cheaper as compared to other life insurance plans. This is the purest form (pure type) of life insurance.
2. Unit Linked Insurance Plan (ULIP/ULIP)
A unit linked insurance plan is a perfect amalgamation of investment and insurance. A portion of the premium paid for a ULIP plan is used as a risk (insurance) cover and a portion is invested in various funds. Depending on the risk tolerance of the policyholder, they can invest in various funds offered by the insurance provider. The insurance providers then invest the collected amount in various money market instruments like shares and equities.
3. Endowment Plan
Endowment plan is a traditional life insurance policy which is a combination of insurance and savings.
In an endowment plan, if the life assured i.e. the life assured lives beyond the policy term, then the insurance company provides maturity benefit to the policyholder. Also some endowment plans may offer periodic bonus which is paid either on maturity or in case of untimely death of the policyholder.
What is Life insurance Max Life Insurance
4. Money-Back
Money back life insurance plan is a unique type of life insurance policy in which a portion of the Sum Assured (Sum Assured) is paid directly to the insured (insured) at regular intervals as a survival benefit. In this way the policyholder can achieve short term financial objectives.
5. Whole Life Insurance
Whole life insurance plans cover the life assured (insured) for the whole life, or in some cases till the age of 100 year. At the time of buying a whole life insurance plan, the sum assured is determined. A nominee is mentioned at the time of purchase. Death claim and bonus, if applicable, is paid to them in case of any unfortunate event.
However, if the life assured (insured) survives more than 100 years, the insurance provider pays the life insured a maturity benefit equal to the endowment corpus (amount).
6. Child Plan
The goal of a child life insurance plan is to build an accumulation (amount) for the future development of the child. Usually it helps in providing money for the education and marriage of a child.
This type of plan provides annual installments or pays a lump sum amount after major milestones of a child's life. If the insured parent dies during the policy term (term) – all future premiums are waived and the policy benefits continue without any interruption.
7. Retirement Plans
Retirement life insurance plan helps in building a stable financial source for the retirement years of an individual. It makes a person financially independent and helps them to live without any worries. Most retirement life insurance plans offer an annual payout (in the form of annuity/annuity) or a one-time lump sum payout (by way of commutation/conversion of the amount accumulated up to the prescribed limit/prescribed limit) on completion of 60 years.
What are the benefits of a life insurance plan?
After knowing about the meaning and types of life insurance, you should know about 3 major benefits of taking a life insurance policy. The 3 major advantages of a life insurance policy are as follows:
1. Security
Life is unpredictable and can be full of uncertainties. It is difficult to overestimate the possibility of an unfortunate event like death. In such situations, the family has to face financial trouble due to lack of a consistent income.
Investing in a life insurance policy from the very beginning in life acts as a safety net in case of such a possible eventuality. The Life Insurance Provider is bound to pay a pre-determined Sum Assured (Sum Assured) to the nominee (nominee) or beneficiary (beneficiary). As a result, the family remains safe even when the policyholder is not there.
2. Long Term Savings
If one wants to make long term investment then it is important to consider about life insurance. These types of insurance plans help you to make systematic savings and build up a corpus which can be used for various reasons like building a new house, good education for your child and wedding expenses of the child. Providing funds for
Not only this, some life insurance policies offer monthly payouts in the form of annuity which is an ideal way to aim and achieve retirement goals.
3. Investment Options / Investment Options
Life insurance providers offer Unit Linked Insurance Plans (ULIPs) which are primarily a means of investment. These market linked life insurance products offer significant returns across maturity, hence making this ULIP a reliable investment tool.
