Looking for Investing in a Life Insurance product? But not sure exactly how it works?
Well this page is aimed to give you a complete understanding on how it works and what you need to understand to choose the products that suits you the best. As at every life stage, everyone has a set of primary needs that requires sufficient funds to fulfill them. This is where life insurance comes into the picture- as it offers tailor made products to cover every aspect at different stages of life.
There is no doubt that life insurance is a must have for everyone. Hence its very crucial to have a complete understanding of the value a life insurance policy can bring in to your life and that of your loved ones.
A life insurance policy is actually a contract with a insurance company. A lump sum amount is provided, in exchange for premium payments, known as the death benefits, to the nominees or beneficiaries upon the death of the insurer.
While choosing a life insurance, the advisor will help you to map your needs & goals. This will help you pick out the options that suits you the best.
Types Of Insurance
1) Term Life Insurance
The most affordable form of life insurance, premiums of plan under this category are cheaper compared to other life insurance products.
The Sum Assured is paid out to the beneficiaries on the completion of the policy tenure.
2) Whole Life Policy
As in the name, this type of policy covers an individual for his/her entire life. This type of insurance covers insurance and investment components.
The insurance part covers the nominee in the event of death of the policyholder and the investment component helps the holder to borrow or withdraw against.
3) Endowment Plan
One main difference that Endowment Plans offer from term plans is the Maturity Benefit.
This type of plan pays out sum assured along with profits under both scenarios – death & survival. The profits that are availed in such plans are the result of investment in equities & debt.
4) Unit Linked Insurance Plans (ULIPs)
As the name suggests, this plan is linked to the markets.
This type of plan are a variant of traditional endowment plan and pay out a certain sum assured on death or maturity, whichever is earlier.
5) Money Back Policy
This type of policy gives out periodic payments over the policy term.
Incase of the death of the policy holder, the beneficiaries get the full sum assured and if the holder survives the policy term, he/she gets the balance amount (sum assured).