Insurance Meaning Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company.
Life Insurance Meaning:
Life insurance is a legal agreement between the insurance company and the applicant, wherein the insurance company promises to pay a lump sum amount of money to the beneficiary at the death of the insured or any other contingency mentioned in the agreement. The payout by the insurance company is made according to the conditions mentioned in the contract. In return, the insured pays a fixed amount of money called premium at regular intervals of time to the insurance company.
Types of Life Insurance Policy
Various types of life insurance policies are available in the market that cater to different kinds of needs and future requirement of the applicants. Following is the list of various types of life insurance policy:
Term insurance: It is one of the cheapest insurance plans available in the insurance industry. As per the plan, the insurance company pays a lump sum amount of money to the beneficiary at the death of the insured during the term of the plan. In return, the insured pays a premium to the insurance company. There is no survivor benefit in this plan. Many companies have included riders in this plan for extra benefits at some extra cost along with the premium.
Whole life plan: This policy gives coverage for the whole life. Here the claim is sure to be made because the duration of coverage is the entire life, and the beneficiary is sure to get the lump sum amount at the death of the insured. The premium is expensive because death is certain and plan gives full risk claim.
Endowment plan: This policy is a combination of protection as well as saving. Here the insurance company needs to pay the fixed amount either at the death of the insured or at the maturity of the policy. The usual duration for these policies is 10, 15 or 20 The premium charged is high. The policy amount can be with profit or without profit depending on the type of policy chosen.
Money back plan: It is apt for people who want both protection for his family as well as some money during the policy to meet his need. In this policy, the insurance company pays a lump sum amount of money at the death of the insured and certain amount at certain intervals like 5 years and 10 years. The premium charged is high.
Unit linked plan: This is protection as well earning through investment in the market. Here, the premium received by the insurance company is divided in two parts. The first part is sent to the pool of the insurance company for meeting the death claims. The second part is invested in the market as per the preference of the insured. The NAV is calculated everyday for these investments. At the time of death, the sum assured along with the invested amount of money on that day is given to the beneficiary. And if the plan matures then the decided amount of money along with the invested amount of money is given to the insured. Usually the premium amount in initial years are given more in the insurance pool then invested in the market.
Retirement plan: This provides protection to both the family and the insured. We all need financial help in old age as the earning capacity in old age is zero. Retirement plan is to secure the old age of the insured. According to this plan one can start investing from very small age and accumulate an amount from where he would get annuity every month after a certain age. Otherwise a person can make a lump sum amount of single payment to the insurance company from where he would get monthly pensions.
Child policy: With the increasing costs of the requirements of life, this policy can help safeguard the future of the child from his birth. This policy can provided a lump sum amount either for higher education or marriage. As per the policy, the child can get a certain amount of money once he/she attains a certain age.
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