Life insurance is a protection against the loss of income that would result if the insured passed away. The named beneficiary receives the proceeds and is thereby safeguarded from the financial impact of the death of the insured.
Advantages of life insurance are as follows:
-> Life Insurance for Future Goal Planning
-> Insurance for Financial Security
->Provide Post Retirement Income
->Insurance as Inflation Shield
DIFFERENT TYPES OF LIFE INSURANCE POLICIES IS DISCUSSED BELOW_
- Term Life Insurance:
TERM LIFE INSURANCE are the basic form of security providence to yourself or family. They provide life cover with no savings profits component. They are affordable form of life insurance as premiums are cheaper compared to other life insurance plans.
Online term insurance plans provide pure risk cover, explains the lower premiums. A fixed sum of money _the sum is paid to the beneficiaries if the policyholder expires over the policy term and if he/she survives there is no pay out.
- Whole Life Policy:
WHOLE LIFE POLICY is a contract with premiums that includes insurance and investment components. The insurance component pays a predetermined amount when the insured individual dies. The investment component builds an accumulated cash value the insured individual can borrow against/withdraw. cash value life insurance is the most basic type.
- Endowment plans:
Endowment plans differ from term plans in one critical aspect that is maturity benefit. Endowment plans charge higher fees / expenses which is reflected in premiums _for paying out sum assured, along with profits, in any scenario of death or maturity. The profits are an outcome of premiums being invested in asset markets as equities and debt.
- Money Back Policy:
A MONEY BACK POLICY is a other form of the endowment plan. It gives periodic payments over the policy term. To the end, a portion of the sum assured is paid out at regular intervals. If the policy holder survives the span of time, he gets the balance sum assured. In case of death, the beneficiary gets the full sum assured.
- Unit Linked Insurance Plans:
ULIPs are a form of the traditional endowment plan.They pay out the sum assured (or the investment portfolio if its higher) on death/maturity.