Question

Explain the types of Life Insurance Policies?

Answer 1

Types of Life Insurance Policy:

1. Whole Life Policy: Under this policy, the whole life of a person is insured. The insured cannot receive money from the insurance company till he is alive. The rate of premium is normally low. The money becomes payable on the death of the insured person to the nominee or the legal heir of the deceased policyholder.
2. Endowment Insurance Policy: Insurance is taken for specific periods under this policy. The sum assured, along with a bonus, is given on the death of the insured to dependents or on the expiry of the specific period, to the insured.
3. Term Insurance Policy: Term insurance policy is taken for a specific period. Term insurance policy has the lowest premium among all insurance policies. Premium is fixed and does not change during the term of the policy. In case of untimely death, the dependents will receive the benefit amount specified in the term life insurance agreement.
4. Money-Back Policy: Money-back policy provides a regular percentage of the sum assured during the life time of the policy and also guarantees the benefit of full sum assured in the event of the death of the insured to the dependents of the insured. Generally, the money-back policy is available for four terms: 12 years, 15 years, 20 years, 25 years, etc.
5. Annuity Policy: The insured has to pay the premium in lump sum or in instalments over a certain period of time. The insured will receive back a specific sum periodically from a specified date onwards, either for life or for a fixed number of years. It is like a pension payment scheme.
6. Child Insurance: A child insurance policy is a savings cum investment plan that is designed to meet a child's future financial needs. A child insurance policy allows kids to live their dreams. A child insurance policy gives you the advantage to start investing in the children's plan right from the time the child is born and provisions to withdraw the savings once the child reaches adulthood. Some child insurance policies allow intermediate withdrawals at certain intervals.
7. Retirement Plans: A savings and investment plan that provides insured income during retirement is called Retirement Plan. On maturity, this corpus is invested for generating a regular income stream, which is referred to as a pension or annuity.
8. ULIP (Unit Linked Insurance Plans): ULIPs are introduced by private companies and are very popular as they combine the benefits of life insurance policies with mutual funds.