Learn about the different types of life insurance policies

Today, let us take a look at the important points about different life insurance policies that can help you get the right policy for you.

Whole life endowment

Purpose: The purpose of this policy is to provide regular income in the middle part of life or after retirement.
Compensation: Regular income can be earned till the age of 100 years even after the premium payment period is over. Fifteen to twenty years ago, the maximum age was kept at 60 years in the policies issued. In case of death of the policyholder, the nominee gets both sum assured and bonus accrued. If the rider of the accident is taken, the sum insured is doubled. That’s the bonus.

Term plan

Purpose: The term plan is not for compensation. It is intended to provide risk cover only. As such, its premium is much lower than other plans.
Compensation: In this type of policy, even if the policyholder survives after maturity, he does not get any compensation. In case of death of the policyholder, the nominee gets the sum insured.

Money back policy

Purpose: This policy is useful if you want a cover over a period of five years along with the insurance cover.
Compensation: Every five years a certain percentage of the sum insured is received as compensation. The last installment on the maturity date of the policy is met with a bonus. In case of death of the policyholder, the sum insured and the bonus accrued are given to the nominee.

Endowment plan

Purpose: The purpose of this plan is to raise regular savings as well as retirement funds and insurance cover.
Compensation: A lump sum is paid when the policy matures. If the policyholder wishes, the amount received on maturity date can also be refunded in installments. This option is called a settlement option, in which the policyholder continues to receive interest on the amount the insurance company allows. In the event of death of the policyholder, the nominee gets the sum insured and the bonus deposited. This amount is also available in installments instead of in full.

Single premium pension plan with instant annuity

Purpose: This policy is taken to get the pension free from the worry of changing the interest rate. The grandparents or parents can pay the premium of the children’s endowment policy from the pension they get by giving this kind of policy as a gift to the children.
Compensation: This type of policy starts getting pension immediately. It is to be noted here that pension income is taxable as per the income tax slab applicable to the policyholder. In case of death of the policyholder, there are several options of annuity. If there is an option to refund the purchase price of the policy then the nominee of the policyholder also gets that amount.

Single premium pension plan with deferred annuity

Purpose: The policyholder can deposit the amount for a few years and allow it to grow and later get a regular lifetime pension.
Compensation: The advantage of starting to collect pension income late instead of taking immediate pension is that it gives higher annuity. The amount already seems to be credited due to the guaranteed edition received under the policy. Therefore, one should not think that money has been blocked in this policy. In case of death of the policyholder, if the option to retrieve the purchase price is kept, the nominee gets the amount and also the guaranteed edition as stated in the policy.

Plans for children

Purpose: This type of policy is taken to meet the future needs of the child through already disciplined savings.
Compensation: From the time a child reaches the age of 18 years to the age of 5 years, the pre-determined amount is received in pieces or even at different stages. When the policy matures, you get the sum insured plus the accumulated bonus.

Health plans

Purpose: This policy does not take Medicim. This is a policy to provide financial protection against serious diseases like cancer or to cover the cost of hospitalization.
Compensation: The cost of hospitalization or treatment is provided in case of certain serious illness and sometimes a lump sum is also paid. For this it is necessary to understand the policy properly. The benefits under this policy need to be carefully read and understood. This plan is a health plan and does not get any compensation. The nominee gets death benefit when there is a policy for certain types of cancer. Based on the above points you can decide to take a policy. When taking out insurance, keep in mind that the element of financial security should always be given more importance than compensation.

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