Insurance that pays out a sum of money either on the death of the insured person or after a set period.
Life Insurance can be defined as a contract between an insurance policy holder and an insurance company, where the insurer promises to pay a sum of money in exchange for a premium, upon the death of an insured person or after a set period.
Type Of Life Insurance
- Term Life Insurance or term Plan : Long-term pure financial protection plan for family. It is widely considered to be the simplest and purest form of life insurance.
- Retirement Plan: Build a retirement corpus or build a pension for your older age.
- Child Plan : Invest in a child’s higher education and marriage goals under the safety of life cover.
- Endowment plan : An endowment plan is a type of life insurance policy that combines elements of savings and protection.
- Group Insurance Plan : Useful for corporates and other organisations to cover their employees and customers against unforeseen hazards.
- Unit Linked Insurance Plan (ULIP) : Invest in a mix of diversified equity and debt funds with just 5-year lock-in for partial withdrawals.
- Saving & Investment Plans : Aim Your invested fund towards a future goal.
There are various insurance policies depends upon needs and personal requirement of insured person.
How to Choose the Life Insurance Policy?
The idea of the right policy differs from person to person. What will be a good option for someone else, may not be as attractive for you. Thus, it becomes important to choose the policy that suits you the best.
Here is how you can choose the right type of life insurance policy:
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- Choose According to the Goal
Different life insurance policies can help fulfil different goals. You should be clear about the goal that you want to achieve with your life insurance policy.
- Consider the Sum Assured
Ascertain the needs and wants of your family members as well as the daily expenses and choose a cover that can fulfil all these. The general rule that goes is that you should select a sum assured which is at least 10 times your annual income.
- Policy Term
While some policies are made to achieve long-term goals and have a longer time frame, some policies have shorter terms as well. Select a policy that has multiple time frames.
- Riders
Riders can enhance your sum assured and can cover those occurrences which the basic policy doesn’t. Choose a policy with maximum riders.
- Check Information of the Company
Apart from the policy, research about the company that provided the policy as well. Check out for the following:
- Choose According to the Goal
- Claim Settlement Ratio
- Solvency Ratio
- Exclusions