One of the most important financial decisions a person can make is buying insurance. Irrespective of what you earn, it is impossible to predict the future. Premature death, accidents, and illnesses that the breadwinner may face can rupture the financial well-being of an entire family. This could lead to devastating consequences for the surviving family members, as they will inevitably struggle to maintain their standard of living. However, if the victim had a life insurance policy, it will cover the outstanding debts or other such financial obligations.
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Types of Insurance Policies:
- Life Insurance
- General Insurance
- Health Insurance
- Marine Insurance
- Fire Insurance
- Travel insurance
1. Risk Coverage: Insurance provides risk coverage to the insured family in form of monetary compensation in lieu of premium paid..
2. Difference plans for different uses: Insurance companies offer a different type of plan to the insured depending on his need for insurance. More benefits come with the more premium.
3. Cover for Health Expenses: These policies also cover hospitalization expenses and critical illness treatment.
4. Promotes Savings/ Helps in Wealth creation: Insurance policies also come with the saving plan i.e. they invest your money in profitable ventures.
5. Guaranteed Income: Insurance policies come with the guaranteed sum assured amount which is payable on happening of the event.
6. Loan Facility: Insurance companies provide the option to the insured that they can borrow a certain sum of amount. This option is available on selected policies only.
7. Tax Benefits: Insurance premium is tax deductible under section 80C of the income tax Act, 1961.
2. Difference plans for different uses: Insurance companies offer a different type of plan to the insured depending on his need for insurance. More benefits come with the more premium.
3. Cover for Health Expenses: These policies also cover hospitalization expenses and critical illness treatment.
4. Promotes Savings/ Helps in Wealth creation: Insurance policies also come with the saving plan i.e. they invest your money in profitable ventures.
5. Guaranteed Income: Insurance policies come with the guaranteed sum assured amount which is payable on happening of the event.
6. Loan Facility: Insurance companies provide the option to the insured that they can borrow a certain sum of amount. This option is available on selected policies only.
7. Tax Benefits: Insurance premium is tax deductible under section 80C of the income tax Act, 1961.
1. Term insurance plan
As the name says Term insurance plan are those plan that is purchased for a fixed period of time, say 10, 20 or 30 years. As these policies don’t carry any cash value their policies do not carry any maturity benefits, hence their policies are cheaper as compared to other policies. This policy turns beneficial only on the occurrence of the event.
2. Endowment policy
The only difference between the term insurance plan and the endowment policy is that endowment policy comes with the extra benefit that the policyholder will receive a lump sum amount in case if he survives until the date of maturity. Rest details of term policy are same and also applicable to an endowment policy.
3. Unit Linked Insurance Plan
These plans offer policyholder to build wealth in addition to life security. Premium paid into this policy is bifurcated into two parts, one for the purpose of Life insurance and another for the purpose of building wealth. This plan offers to partially withdraw the amount.
4. Money Back Policy
This policy is similar to endowment policy, the only difference is that this policy provides many survival benefits which are allotted proportionately over the period of the policy term.
5. Whole Life Policy
Unlike other policies which expire at the end of a specified period of time, this policy extends up to the whole life of the insured. This policy also provides the survival benefit to the insured. In this type of policy, the policyholder has an option to partially withdraw the sum insured. Policyholder also has the option to borrow sum against the policy.
6. Annuity/ Pension Plan
Under this policy, the amount collected in the form of a premium is accumulated as assets and distributed to the policyholder in form of income by way of annuity or lump sum depending on the instruction of insured.
As the name says Term insurance plan are those plan that is purchased for a fixed period of time, say 10, 20 or 30 years. As these policies don’t carry any cash value their policies do not carry any maturity benefits, hence their policies are cheaper as compared to other policies. This policy turns beneficial only on the occurrence of the event.
2. Endowment policy
The only difference between the term insurance plan and the endowment policy is that endowment policy comes with the extra benefit that the policyholder will receive a lump sum amount in case if he survives until the date of maturity. Rest details of term policy are same and also applicable to an endowment policy.
3. Unit Linked Insurance Plan
These plans offer policyholder to build wealth in addition to life security. Premium paid into this policy is bifurcated into two parts, one for the purpose of Life insurance and another for the purpose of building wealth. This plan offers to partially withdraw the amount.
4. Money Back Policy
This policy is similar to endowment policy, the only difference is that this policy provides many survival benefits which are allotted proportionately over the period of the policy term.
5. Whole Life Policy
Unlike other policies which expire at the end of a specified period of time, this policy extends up to the whole life of the insured. This policy also provides the survival benefit to the insured. In this type of policy, the policyholder has an option to partially withdraw the sum insured. Policyholder also has the option to borrow sum against the policy.
6. Annuity/ Pension Plan
Under this policy, the amount collected in the form of a premium is accumulated as assets and distributed to the policyholder in form of income by way of annuity or lump sum depending on the instruction of insured.
Some of the prominent life insurance companies in India are:
We all are uncertain of the future and although no one wishes anything unfortunate to happen to them, we should be prepared for unforeseen circumstances. Having a life insurance policy is a financial cushion that makes sure your family is well protected. A life insurance policy hence is a very small investment compared to the greater peace of mind it will bring you.
- LIC – Life insurance corporation of India
- SBI Life Insurance
- ICICI Prudential Life Insurance
- HDFC Standard Life Insurance
- Bajaj Allianz Life Insurance
- Birla Sun Life Insurance
- Max Life Insurance
- Kotak Life Insurance
We all are uncertain of the future and although no one wishes anything unfortunate to happen to them, we should be prepared for unforeseen circumstances. Having a life insurance policy is a financial cushion that makes sure your family is well protected. A life insurance policy hence is a very small investment compared to the greater peace of mind it will bring you.
