What are the main types of Life insurance plans?

What are the main types of Life insurance plans?

Everyone must have heard about a life insurance policy. Some of us have opted one for themselves and their family. The term “Life Insurance” itself reveals its meaning that shows to Insure your life. This is basically a contract between an insurance company and the policyholder in which the insurance provider will pay a fixed amount of money if something happens to the policyholder. For this, the policyholder has to pay a certain amount of money at regular intervals and the company will pay the higher amount. Life insurance always has a nominee who will receive the benefit of, say the insured amount.

Generally, people thought that life insurance only pays the amount after the demise of the policyholder but the fact is there are multiple types of the life insurance policy. In these policies, you can avail of the benefits along with spending your normal life. Some of these are used as investment purposes while others are helpful in your pensionary life. Life insurance policies are also eligible to get tax deduction under Section 80C and Section 80D of the Income Tax Act.

Know more about the details of various types of life insurance policies

  • Term Insurance Plan:

    In this insurance policy the insured has to pay a premium. In return, the insurance company will pay the fixed sum insured amount to the nominee after your death. This policy is for a fixed time period. In case if nothing happens to the insured person within that time interval then the premium amount will be returned back to you.

  • Whole Life Insurance Plan:

    This is a long-term plan in which the policyholder agrees to pay a premium at regular intervals for a fixed time period. After completion of that time period (maturity period), he will get the promised sum insured amount along with the interest.

  • Child Life Insurance Plan:

    Life is unexpected and it becomes more challenging when you have children. Who will take care of your children and pay for their education after you? Well, there is a child life insurance plan that you can purchase to secure your children’s future after you. This plan provides financial coverage for the future expenses of your children.

  • Endowment Life Insurance Plan:

    Alike term insurance, this will also pay a fixed amount of money after a time interval regardless of your life. This plan has a little high premium as compared to the term insurance plan. Customers can purchase this policy for a fixed time period of their choice e.g. 5,10,20,25 years or more.

  • Pension Plan:

    Post-retirement days are very difficult for old aged people. Pension insurance Plan will work as an investment in your old days. To get this, you have to invest your money with an insurance company as a premium in your young days. There are piles of pension plans available in the market that have different benefits and features.

  • Money-back Insurance Plan:

    A little different than the endowment plan, this policy gives you a high sum insured with some additional bonus. In a Money Back Insurance Plan, you will get a return in multiple parts consecutively after fixed intervals.

  • Investment Life Insurance Plan:

    Life insurance policies are a good investment option as it ensures high returns. You can purchase an investment plan to enhance your savings and lead a luxurious life in the future.

Tips to choose the best Life Insurance policy

Choosing a life insurance policy is a tough decision to make. Especially when there are uncountable life insurance companies that are upsurge in the market. Every plan available in the market has its own unique feature and benefit. So, you need to classify them and choose the one that gives a low premium. Below are some points that will surely help you to get affordable life insurance policies.

  • Check for the claim settlement ratio:

    Claim settlement ratio is the average count of satisfied customers of a company in a year. A company with a high claim settlement ratio has good credibility and more satisfied customers. This will give you a rough idea about the performance of the company for other customers. If a company is fulfilling the need of other people then it will also help to fulfill yours.

  • Customer reviews are important:

    The name of the company doesn’t give customers. You need to perform well among your competitors to stand out in the market. In modern times we look for reviews even before purchasing a pen. Then why do you skip this while choosing the most important plan of your life in which you are going to invest your hard-earned money? Reading customer reviews will also strengthen your life insurance buying decision from a particular company.

  • Estimating sum insured:

    Life insured is an investment for your future. It will be beneficial to you, if not you then definitely to your loved ones. When it is about money everyone thinks twice before investing. And when it is about high returns then you should have to think about it even more. Redeciding your sum insured will give you an idea about how much more you will get in return. Will the return be sufficient for your family after you or not? If you get a positive answer to all these questions then go for that particular sum insured.

  • Overall tenure of the company in the market:

    The market competition gave rise to multiple insurance companies in the market. Some of them are doing well while others trick the money from customers and vanish from the market. So, checking the history of the company is important. Like how long the company has been working in the market? About its shares in the company and its reliability. Trusting and investing money in a newly established company is equal to staking your money at no profit. Also, it is not sure that the company will remain in the market until your policy maturity period or not.

What is Insurance policy?

Insurance policy

Every person works hard to earn money so that he can arrange a house, feed his family, start a business, buy a car or other costly items for use. After spending so much money on a costly thing, if it gets damaged then your whole earned money will go in vain. To save yourself from this financial risk you can take an Insurance Policy. The insurance policy will provide compensation for your loss. You have to deposit a small amount of money in the company and at the time of loss it will handle your expenses or provide compensation for the expenditures. You can ensure your shops, house, building, car, bike, mobile phone and all other things that you have purchased for money. All the movable and non-movable things available on the earth can be insured.

How many types of insurance policies are there?

You can find insurance policy for each and every item you are seeing near you whether it is any living thing or non-living thing. There are mainly two types of insurance  

Life insurance policy: Under this policy, the insurance company will insure your life by taking a small amount of money annually. As you all must have heard the proverb “If there’s life, then there’s the world”. So according to this, life is the most important thing anyone can have whether it is the life of your parents, wife, children or yours. Death is uncertain and having life insurance will provide financial security to the family of the policyholder after his demise. These are two types of life insurance:

  1. Term Life Insurance Policy: In this you will get coverage for a specific period of time. If the insured person dies when the policy is in active state, then only you will get the benefit of term life insurance.
  2. Whole Life Insurance Policy: In this you have to pay a premium till your death and after your demise, your family can claim for the benefits of the policy.

Whole life insurance policy is much better and costly than the term life insurance policy. The premium of the policy depends on the age, health and gender of the person. For females the premium amount is low and they can afford to pay that easily. 

Non-life insurance policy: All the non-living things are covered under this policy. Non-life insurance policy includes health insurance, car insurance, shop insurance, liability insurance, travel insurance, business insurance, social insurance and the list is too long. This insurance will provide the coverage for damaged property, reimbursement of hospital expenses or the cost of repairing charges.

What are the common non-life insurance policies available in the market?

  • Health Insurance: Medial emergence can happen with anyone as it is not predefined. Health insurance will take care of your medical expenses if you fell ill or go through a serious disease. It will pay the bills of your hospital, medicines, room rent, ambulance charges and surgery charges. Health insurance also covers your critical illness and long-term diseases, such as diabetes, cancer and Tuberculosis. Many companies also provide the facility of cashless treatment in-network hospitals.
  • Auto Insurance: This insurance basically provides security to your car, bike, scooter or any other vehicle from damage. The damage may be caused due to any natural disaster, accident, riot or burglary, it will protect you from the expenses of repairing. Apart from this, auto insurance will also pay for the medical bills if someone gets injured due to that accident. It will also protect you from litigations and penalties.
  • Accidental Insurance: You are walking on the road and suddenly a car hits you, then you should have to go to the hospital for taking first aid in case you get some minor injuries. But it might be possible that any serious injury can happen. So, at that time accidental insurance will help you in paying the hospital bills. As it is insurance with a low premium, so it has its limitations and clauses which the policyholder has to follow. Certain types of major accidents are excluded from this insurance, as it will cost too much according to the premium.
  • Home Insurance: Home is among the most vital things that a person could need for shelter. If something will happen to your house then it will create a major problem for you to search for a shelter for too long. This insurance will provide you financial security if your home is damaged due to burglary, fire or any natural disaster like flood, cyclone and hailstorm. The insurance company will also provide the expenses for the interiors and electronics items as per the availed coverage.
  • Business Insurance: This insurance is taken by the people who are running a business and provide employment to others. In this insurance you can insure your property, machinery, employees related risks, fall in business due to the operating environment of the business or factory.

What is the procedure for insurance to work?

The insurance company is just like a bucket where people can put their money on a regular basis. So that if any mishap happens with anyone then they can withdraw a limited amount of money to manage their financial loss.

The mishap can be with your home, shop, business, car or any other thing. You can only take money from the bucket for the predefined cause that is mentioned in the contract and not for any personal cause.

The insured person has to claim the reimbursement with the images of damaged property or death certificate in case of life insurance and other related documents that are mentioned in the clause. The insurance company will also investigate the claims whether they are genuine or not.

In what cases you will not be able to take successful claims?

At the time of purchasing any insurance policy you have to provide correct information to the company. It will help you with successful and hassle-free claim settlements. If you will provide the wrong information and it further gets detected by the insurance company at the time of investigation then it may cause a problem for you. The insurance company can also take a legal step on you for forgery and providing bogus information.