Need of Life Insurance
Two major risks of Life –
Living too Short: Dying Early in life is really very painful for the left loved ones and if person is in an Adult Hood and Married with kids (no need to say further)
Living too Long: Even living too long sometimes become painful for survival (specially for women as they live longer as compared to men’s)
Everyone Do understand this Need and do take Insurance to take care of both the eventualities. Even wide range of Insurance Options are designed accordingly only, Both the events or say risk of living short and living the loved one behind can best be tackled with different types of Life Insurance
Types of Life Insurance
Logically and ideally speaking there are just 3 type of Life Insurance available, which further are classified or are designed with different types of policy and plans and are know with different different names
1) Term Insurance Policy: This are generally called as pure insurance policy and are termed as non participating insurance plan, (which means they do not participate in profits of insurance company and no bonus are given or nothing is share with the policy holders at the end of the policy period). Hence this policy are available with lowest premium as compared to any other policy. Two kind of term insurance are
a) Term Insurance : Where only policy administration, and mortality charges are charged in such policy according to the person age and differ from company to company
b) Premium Return Term Insurance: This policy are an extension of pure term insurance where person have to pay some more charges extra as compared to term insurance, but at the end of Policy Term you get all the premium paid back at end of policy term. (A Very Good Option)
2) Endowment Insurance Policy: This policy are also called as traditional insurance policy and can be participating and non participating. Majority of all the policy are participating policy and are entitled to bonus and guaranteed returns at the end of the policy term during maturity. Generally all the types of insurance mentioned below are just an extension of endowment plan which are designed to meet different need of the people at different stages of life
a) Money Back Plan
b) Joint Life Insurance Plan
c) Guaranteed Monthly Income Plan
d) Whole Life Insurance Plan
e) Retirement Solution (Insurance Plan)
f) Pension Plan, Child Plan etc…
3) ULIP Insurance Policy: Unit Linked Insurance Plan are one more type of policy which are completely different where in, as per the approved limitation received from IRDA the portion or premium is invested in market or in private sector companies other than Government Bonds or Safe investment instruments which are followed in endowment plan, The ULIP Plan operates and are managed similarly like Mutual Fund
a) Child Education Plan : (Majority of Child Education Plan are ULIP Plan only)
b) Growth Fund Insurance Plan
Always check and take details with regards to types of policy and focus on the words such as pure term plans, traditional plans, participating plans and ulip plans which will help to determine the returns and type of policy proposed for you.
NOTE: LIFE INSURANCE is just not a product to buy, In today’s world Life Insurance planning plays a major role in Financial Planning and can even help you achieve your financial goals and save on your taxes too. Remember - There is no substitute to Life Insurance. Proper structuring your insurance planning based on your needs and requirements does help you to live happy and safe life.
(Term Insurance tackles best the risk of Living to Short & Whole Life Policies as best an alternative to tackle risk of living too long)
