Great care should be taken while choosing a life insurance policy. First of all, it should be seen that how many types of policies are available in the market and which policy is most suitable according to your needs. After that You should decide to buy the policy itself.
Insurance is actually a contract which is between the insurance company and the insured. Under this contract, the insurance company takes a fixed amount (premium) from the insured. Indemnifies the insured in case of any loss as per the terms of the policy.
Life insurance means that on the death of the person buying the insurance policy, his dependent gets compensation from the insurance company. Keep in mind that there are many types of life insurance. Keeping in mind your needs, you should get life insurance. There are 8 types of life insurance policies available in India. We will tell you about them.
Lifelong Life Insurance
Lifelong Life Insurance provides lifelong protection. On the death of the policyholder, the nominee gets the insurance claim. It differs from other policies in the sense that other life insurance policies have a maximum age limit. If the policy holder dies after the specified age limit, then the nominee cannot claim the death claim. There is no such age limit under life life insurance. Its premium is very high. The policyholder has the option to partially withdraw the sum assured. Money against this policy can be taken on loan.
These plans have been made keeping in view the cost of education and other needs of children. In child insurance, a lump sum amount is paid after the death of the policyholder but the policy does not lapse. All future premiums are waived off and the insurance company continues to invest on behalf of the policyholder. The child gets money for a certain period.
In this also both safety and investment remain. There is no guarantee of returns in ULIPs as the portion invested in ULIPs is invested in bonds and stocks and you get units like mutual funds. Returns are based on market volatility. However, you can decide how much of your money is to be invested in stocks and how much in bonds.
Term Insurance Plan
This plan is purchased for a fixed period of time. You can buy it for 10, 20 or 30 years. Coverage is available for the chosen term in a term insurance plan. There is no maturity benefit in this. Term insurance plans provide life cover without the savings/profit component. The Sum Assured under the policy is paid to the beneficiary on the death of the policy holder during the policy term.
Moneyback Insurance Policy
In this policy the sum assured along with bonus is returned in installments during the policy term itself. The last installment is received at the end of the policy. If the policyholder dies during the policy term, the entire Sum Assured is paid to the beneficiary.
This insurance policy consists of both insurance and investment. It has a risk cover for a fixed period. At the end of the stipulated period, the policyholder gets the sum assured along with the bonus. The face value of the policy amount is paid under the endowment policy on the death of the policyholder or after the specified number of years. Some policies also pay in case of critical illness.
Savings and Investment Plans
This plan assures the insured and his family a lump sum fund for future expenses. This type of life insurance category covers both traditional and unit-linked plans.
Life insurance cover is not available in this plan. In this, you can build a retirement fund by assessing your risk. After a stipulated period, you or the beneficiary after you get paid a certain amount as pension. This payment can be on monthly, half yearly or yearly basis.