FORMS OF LIFE INSURANCE POLICIES
THERE ARE VARIOUS FORMS OF LIFE INSURANCE POLICISE LIKE...
Term insurance plans
are the basic form of life insurance.
They provide life cover with no gain or loss component. They are the most cheap
and affordable form of life insurance as
premiums are very low cost compared to
other life insurance plans.
Online term
insurance plans provide pure risk cover, which explains the lower premiums. A
fixed sum of money - the sum assured – is paid to the beneficiaries if the
policyholder expires over the policy term. If the policyholder survives, there
is no return or pay out .
Endowment
plans
Endowment
plans differ from term insurance plans in one critical aspect i.e. maturity benefit.
Unlike term plans which pay out the sum assured with profits only in
case of an eventuality over the policy term, endowment planspay out the sum
assured under both scenarios – death and survival. However, endowment plans
charge higher fees / expenses – reflected in premiums – for paying out sum
assured, along with profits, in either scenario – death or maturity date. In this kind of plan there is chance of gain or profit or no loss.
Unit linked
insurance plans (ULIPs)
unit linked insurance plans (ULIPs) are a
variant of the traditional endowment plan.They pay out the sum assured (or the
investment portfolio if its higher) on death/maturity.
these are differ
from traditional endowment plans in certain areas. As the name suggests,
performance of unit linked insurance plans is linked to markets. Individuals can choose the investments in stock markets. The value of the investment is
captured by the N.A.V (net asset value).
Whole life
policy
A whole life
insurance policy covers a policyholder over his entire life. The main advantage of a
whole life policy is that the validity of the policy is not defined so the
individual enjoys the life cover throughout his life. The policyholder pays
regular premiums until his death, upon which the corpus or capital is paid out to the
family.
Money back
policy
A money back
policy is a variant of the endowment plan. It gives periodic payments over the
policy term. To that end, a portion of the sum assured is paid out at regular
intervals. If the policy holder survives the term, he gets the balance sum
assured. In case of death over the policy term, the beneficiary gets the full
sum assured amount.
