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Different Types of Life Insurance Policies

What is Life Insurance?

A life insurance policy is a long-term contract with an insurance company that allows you to provide an adequate level of security for your family in case something untoward was to happen to you. Although no amount of money can ever compensate for the loss of an individual, life insurance provides you with the peace of mind, knowing that your family will be taken care of financially. Having a life insurance policy in place thereby ensures that your family will be able to pay off any mortgage, liabilities, medical expenses or outstanding loans and continue living in case of your absence. Besides this, the policyholder also is provided with the option to add on several riders on the holder’s requirement.

Types of Insurance Features
Term Insurance 1. Term insurance is the simplest and cheapest form of insurance that offers financial coverage to the policyholder’s family for a set period of time.
2. In case of an unfortunate event during the policy term, beneficiary of the policy holder gets a lump sum amount i.e. sum assured to lead a financially stable life.
3. Term insurance plans are designed purely to protect financial future of family of policy holder .
Endowment Plans 1. Endowment plans differ from term plans and come with a specified maturity benefit, as decided by the insurer.
2. In case of an untoward incident which leads to the demise or in the event of a permanent disability, during the tenure of the policy; the sum assured will be payable to the said beneficiaries to the policy.
3. However, if the policyholder survives the term of the policy, the agreed maturity benefits become payable.
Whole Life Policy 1. Whole life policies tend to offer the policyholder lifelong protection.
2. The policyholder pays regular premiums unless he meets an untimely demise, upon which the corpus is paid out to his family or beneficiary.
3. As there is no pre-defined policy tenure, the policy expires in case of an eventuality.
4. It combines permanent protection with a savings component and is ideal for individuals looking to create an inheritance or estate for their children.
Unit Linked Insurance Plans 1. ULIP or Unit Linked Insurance Plans is a combination of insurance and investment as they provide risk cover for the policyholder along with investment options.
2. ULIPs offer the insured, the opportunity for wealth creation while providing the security of a Life Cover. In ULIPs, a portion of the premium goes towards providing the life cover, while the remaining portion is invested in equities or debts (or a combination of both) which is also subject to market volatility.
3. ULIPs pay out the sum assured (or the investment portfolio) whichever is higher, on death/maturity.
Money Back Policy 1. Money Back plans pay the sum assured to the insured party on maturity while also providing certain amounts called survival benefits. These survival benefits are made on a periodical basis.
2. When the term expires, the policyholder gets the balance sum assured.
3. Additionally, in case of the policyholder meets with an untimely demise during the policy term, the beneficiary gets the full sum assured.
4. The policyholder might also be eligible to receive a bonus from the insurance company based on its performance.

The Bottom Line

You have always been there for your loved ones, are it financially or emotionally, but have you ever taken into consideration, how they would cope if you’re no longer around to support them? Life insurance is one of the pillars of personal finance and should be taken into consideration by every household. Opt for the right life insurance product for your family today and stay protected at all times!

AN Jan 58/17

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