What is life insurance, how many types is it?

 

Let's talk on the topic today that what is Life Insurance? Before that, we try to know what is insurance. Insurance is the weapon to deal with the possibility of any loss in future. We do not know what will happen tomorrow, so we try to compensate for the possible loss in the future through an insurance policy. Insurance means protection from risk. If an insurance company insures a person, then the insurance company will compensate for the financial loss caused to that person. Insurance is actually a contract between the insurance company and the insured person. Under this contract, the insurance company takes a fixed premium from the insured and pays damages to the insured person or company in case of any loss according to the terms of the policy.

 

Life insurance is very important, but the language of life insurance is so difficult that it is difficult for even the best people to understand the difference between different policies. Life insurance provides financial security to the dependent people after the sudden death of employed people. A man's life is very valuable and it is not easy to determine his economic value. But taking life insurance, you take an even assured policy. Under this, his nominee gets that amount on the insured's untimely death while the policy is in operation.

 

1. Term insurance plan

Life insurance that provides only this type of insurance is called term life insurance. This is purely a life cover. It is simply life insurance that promises to pay a guaranteed amount in the event of the death of the insured during the policy's term. This plan can be purchased for a fixed time, such as 10, 20, 30 or 40 years. Under this plan, you get coverage for a tenure that you choose. In such a life insurance policy, there is no maturity benefit. These provide life cover without savings/profit component. So they are cheaper than other policies. In term insurance, a certain sum of money is paid to the assured beneficiary under the policy on the death of the policyholder during the policy term. In term insurance, a higher sum assured is available at a lower premium.

 

2. Endowment Policy Plan

This type of life insurance policy has both insurance and investment. In this policy, there is a risk cover for a fixed period and the sum assured is returned to the policyholder along with the bonus at the end of that period. The face value of the policy amount is paid under the endowment policy after the death of the policyholder or after a specified number of years. Some policies also pay in case of critical illness.

 

3. ULIP Plan

In this plan also both protection and investment remain. In traditional ie endowment insurance policy and money back policy, the returns are certain to a certain extent, while there is no guarantee of returns in ULIPs. The reason for this is that the portion invested in ULIPs is put into bonds and shares and you get a unit just like a mutual fund. In such a situation, the returns are based on market fluctuations. However, you can decide how much of your money should be invested in shares and how much money should be invested in bonds.

 

4. Retirement Plan

Life insurance cover is not available in this plan. This is a retirement solution plan. Under this, you can create a retirement fund by assessing your risk. After a fixed period, a fixed amount will be paid as a pension to you or to Beni Fesiri after you. This payment can be on a monthly, half-yearly or yearly basis.

 

5. Lifelong Life Insurance Plan

In Whole Life Insurance Plan, you get lifetime protection. That is, there is no term of the policy. Upon the death of the policyholder, the nominee gets an insurance claim. Other life insurance policies have a maximum age limit, which is usually 65–70 years. After death, the nominee cannot take the death claim. But under the Life Insurance, the nominee can claim the death of the policyholder even at the age of 95. The premium of this policy is very high. Under this policy, the policyholder has the option to partially withdraw some insurance. Apart from this, he can also take money in lieu of the policy as a loan.

 

6. Money-back Insurance Policy Plan

This policy is a kind of endowment policy. There is also a combination of investment and insurance in this policy. The difference is that in this life insurance policy, along with the bonus, the sum assured is returned in instalments only during the term. The last instalment is available at the end of the policy. If the policyholder dies during the policy term, then the entire sum assured gets to the beneficiary. Although the premium of this policy is the highest.