Life Insurance
What is a Life Insurance Policy?
Life insurance policy is a contract where the insurance company offers financial coverage through which it guarantees to pay a fixed amount to the beneficiary if the insured person loses his/her life by an unfortunate event during the term of the insurance plan. To remain covered under a life insurance plan, you need to pay a life insurance premium.
The life insurance premium is usually paid annually but you can also opt for monthly or half-early modes of payment. While purchasing a life insurance policy, you will end up being confused about what should be the term of the policy or what amount should be your sum assured? Don’t worry that is when our experts will help you find the right life insurance plans.
1. Term Insurance
A term insurance is one of the most affordable type of plan that provides protection to the nominees in case the policyholder meets an unfortunate death. The financial coverage is given on the basis of the premium that the policyholder pays during the policy term. Further a term insurance plan is also classified into the following:
- Return of Premium Term Insurance : This is a type of term insurance plan that provides a survival benefit in case the policyholder outlives the policy term. Moreover, the entire premium that is paid is also paid back to the policyholder if the policyholder survives.
- Whole Life Insurance : Whole life insurance plan provides term insurance coverage to the policyholder till the age of 100 years. So, if you want a longer coverage for your family, then this plan is the best-suited for you.
- Zero Cost Term Insurance : Under this type of term insurance plan, a policyholder can make an exit from their term insurance plan at any point of the policy term and still get all the premiums back.
- Increasing Term Insurance : Increasing Term Insurance
- Decreasing Term Insurance : On the other hand, in decreasing term insurance, the coverage decreases at a specific rate over the policy term.
2. Investment
An investment plan is one where you pay a specific amount during the policy term to get guaranteed returns over the long run. Some of the different types of investment plans that you can consider buying are as follows:
- ULIP : ULIP or Unit Linked Insurance Plan which provides dual benefits of both insurance and investment. It is a market-linked investment plan and thus you must keep the risk appetite in mind before investing in ULIP.
- Endowment Plans : This type of investment plan provides both survival and death benefits. A maturity benefit is paid out to the policyholder after a specific duration, while life insurance benefit is given in case the policyholder meets an unfortunate demise.
- Retirement Plans : If you are looking for an investment plan that will be helpful in creating a corpus for your retirement, then you must invest in a retirement plan. There are a number of companies that offer retirement or pension plans at affordable rates.
- Child Plans : As the name suggests, this type of plan is suitable to meet the financial needs of your child such as funding their education. A child plan remains active even if the policyholder passes away and the balance premium is later paid back by the insurer.
Did You Know?
Apart from Under section 80C of the Income Tax Act1961, a policyholder can enjoy a tax rebate on payment of a life insurance policy premium, Life Insurance can also get you loans?
A lot of policyholders are not aware of that fact that a life insurance policy can be utilized as loan collateral depending on its type and value. A policyholder can apply for a loan from a bank or NBFC as per applicable terms and conditions.
