What is life insurance
Life insurance is a legal agreement between the insured and the insurance company under which the insured pays a fixed premium and in return the insurance company provides protection for his life.
If the life assured dies during the term of the policy, then the life insurance company pays the sum assured to the nominee decided by the life assured; Life insurance also provides benefits on total disability and maturity, with additional benefits depending on the type of life insurance.
Types of life insurance
Term Life Insurance:
Term life insurance provides financial protection to the family members of the insured in case of untimely death of the insured during the policy term. If the insured survives the term of the policy, no benefit will be paid to him. The insured has to pay premiums in due course to ensure this coverage at the time of death.
The specialty of endowment policy is that it works like your insurance as well as savings. In this insurance, the insurance company keeps a part of your premium for investment and a part is used for your insurance.
After the endowment plan policy expires, whatever amount of insurance you have decided and with it the bonus of the number of years your policy has run is given to you.
Term life insurance
Term life insurance provides coverage for a specific period – or periods. For example, if you buy a term life insurance policy, you will usually be covered for 10 to 40 years. Ideally, when your coverage ends, you no longer have major financial obligations – such as providing for your family or paying for a mortgage.
Term life is more affordable than permanent life insurance and can be bought in large amounts in lakhs. When you are raising a family, it is best to buy term insurance during your peak earning years.
Money back insurance plan
Money back insurance plan is such a life insurance policy, in which some percentage of the sum assured is returned from time to time as a benefit to the insured. In money back plan, bonus is declared by the insurance company from time to time, which is paid to the insured. If the insured survives even after the insurance period, he continues to get the sum assured and the accumulated bonus.
In money back insurance plans, the insurance premium is paid annually, half-yearly, quarterly or monthly. In case of unfortunate death of the policyholder before the maturity of this insurance policy, the beneficiaries are entitled to receive the entire sum assured irrespective of the number of instalments.
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