Life insurance can be considered as a contract between the insured (Policy holder) and insurer (Insurance Company) stating that until the insured pays his premium until his death and the insurer will pay back his sum assured and along with the bonus amount at his death. The advantages of life insurance are “harmony of mind” is that the person knows that the death of the policy holder will not create any financial problems for his loved one and also for his lenders.
Life insurance is not only meant for the death claims but it may sometime be a retirement benefits also. Life insurance policies are legal contracts and the person who takes the policy should be clear with the terms in the contract because in many cases the death claims will not be allotted such as fraud, suicide, riots, war and in civil commotion.
Life insurance can be classified into two major groups:
• Protection Policies – calculated to offer a benefit in case of a specified event. It is generally a lump sum payment policy known as insurance.
• Investment Policies – it is meant with an intension to smoothen the progress of capital by regular or single premiums.
Types Of Life Insurance
Life insurance can be classified into two basic categories: Temporary and permanent; or the following subcategories as Term, universal, whole life and endowment life insurance
As the name signifies it is very clear that in that in this policy only the life insurance is taken up for a particular term, the policy does not meat on cash value only the premium buys possession to claim in case of death
Permanent Life Insurance
Permanent Life Insurance is a simple life insurance which remains lively until the policy matures and until the owner fails to fill the premium amount in time, the four basic varieties of permanent insurance are Universal Life, Whole Life, Endowment and limited pay
Universal Life Coverage
This is new type of insurance product, which is made to meet up the permanent insurance coverage with greater options in premium compensation also with great cash values. There are various type of universal life coverage policies like interest sensitive, variable universal life, guaranteed death benefit and equity indexed universal life insurance.
Whole Life Coverage
Whole life insurance provides whole life span death advantage coverage for the premium paid. Here the premium rate would be much superior than the term insurance. Here the premium paid by the policy holder can be take out as the loans until the person dies, if in case the person dies without fulfilling the loan taken then the insurance company will pay back the death benefits but with the subtraction of the remaining loan amount.
Endowment policy is a collective cash value of the policy contemporaries the death benefits at a certain age. The fixed age in the endowment policy is known as the Endowment age. Generally endowment policies are more expensive than any other insurance policy
This is another type of permanent insurance in which the premiums are paid for a fixed amount of years for example 10 years, 20 years and the policy matures at the age of 65. In the limited pay policy you need not pay any extra amount after the term of the policy