Classifications of Life Insurance

Classifications of Life Insurance

  February 19, 2018    insurance

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Term Insurance

It is a kind of life insurance policy that falls into the complete protection category. It offers pure protection. Basically, it covers the chance of dying. In this plan, the sum assured amount that your insurer promises to pay could be provided to the nominee or beneficiary as previously mentioned in the policy document in case there is insured's death. In the event that you survive in the policy term period, you then will get nothing or could possibly get your premium back which basically varies from insurer to insurer.If you are intending to buy pure life risk cover, then term insurance is the most effective and cheapest type of life insurance policies.

Whole Life insurance

Remaining plans that come under life insurance such as endowment plan, money-back plans, ULIP, etc. provides coverage to the insured for a particular age- majorly 65 to 70 years, whereas a expereince of living plan provides coverage for the whole life. In this plan, generally the insured is given a choice to cover reasonably limited amount till the specified time which can be also referred to as maturity period. If the insured person reaches maturity, then he or she has the option to carry on the same till death without paying any additional premium and encashing the sum assured or bonuses.

Endowment Plan

Unlike Term Plan, endowment plan pays you out the sum assured combined with the profits in both cases- death and survival. This plan charges an increased premium that will be being invested in the asset market- Equity and Debt. An endowment is a form of life insurance in that your insurer promises to pay for the lump sum amount during the time of maturity. Majorly maturities are ten, fifteen or twenty years up to a definite age limit. Some plans also pay an amount in case there is critical illness. Endowments amounts could be cashed early and the insured will get the surrender value which would be determined basis just how long the policy has been running and just how much has been committed to it.