Term insurance is an insurance policy assured over a period of time as listed in Ravi’s example. A person can opt a policy for a specific period of time. The premium is calculated based on the current health of the person who opts for the policy. Generally, the term plan has a very low premium compared to the sum assured.
This plan is suitable for a person who wants to secure the financial situation of his/her family members. Once the health of the person is analysed the premium amount is determined. Later, the policyholder has to pay the premium every month. If some unexpected situation happens that the policyholder has demised. The sum insured is passed to the nominee.
Bharathi Axa term insurance policy is an example of a term insurance policy.
Whole Life Insurance Plan
Whole life plans are totally different from term life insurance. As the name suggests, the person is eligible to take insurance for his whole life. The whole life insurance plan acts as saving and as insurance. The policyholder has to pay monthly or annual instalments. Due to any unexpected demise that happens to the policyholder, the sum assured is paid to the nominee. The difference here is that,
In term insurance, the sum assured is paid only till the fixed period of years. But in whole life insurance, the sum assured is paid irrespective of the time period.
Another advantage is that the whole life insurance can be kept as collateral. The collateral is considered for a loan from the same bank. As the sum assured is to be paid compulsory to the nominee banks do consider the same as collateral.
TATA AIA Life Insurance Fortune Maxima is an example of Whole life insurance plan
Endowment plans are an advancement to the previously discussed insurance plans. The Endowment plans come with an insurance and also a saving plan. From the premium amount some part is invested for savings. Same as the other plans the persons health report is analysed to decide the premium.
Once the policy is set the policyholder starts to pay the premium amount monthly or annually. With other policies the sum assured won’t be paid if the term period is crossed. But in endowment plan even though the term period is crossed the policyholder receives the returns from the plan.
Indiafirst life guaranteed benefit plan is an example of Endowment plans
This plan offers a stipulated percentage of the assured sum. The policyholder receives returns at pre-decided intervals. These returns are known as a survival benefit.
A money-back policy is for individuals who want investments and liquidity. These plans are eligible for bonuses as declared by the insurer.
An alternate of whole life insurance is available in the market. It clubs the benefits of life insurance plans with ULIPs. A whole life ULIP gives extensive coverage with high returns.
A child plan acts as an investment to generate funds for the policyholder’s child. A child plan helps one build savings for their child that can be used for the child’s education and wedding. Child plans provide benefits as installments on an annual basis or a lumpsum payout.
The payout is done once the insured child reaches 18 years. In the demise of the policyholder immediate premium payment is payable. Some life insurance providers waive off future premiums. They continue till the opted policy term.