What is Insurance ? Discuss various types of insurance available in the market.
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Insurance is an arrangement by which a company or the state undertakes to provide a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified premium.
some types of insurance that are available in the market....
1) Auto Insurance.
2) Homeowners/Renters Insurance.
3) Umbrella Policy.
4) Health Insurance.
5) Long-Term Disability Insurance.
6) Term Life Insurance.
7) Long-Term Care Insurance.
8) Identity Theft Protection.
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Life Insurance policy – almost all of us have heard this term and are aware of its importance in life. A Life Insurance provides a financial security (in the form of sum assured) to the family of insured in case of his/her untimely demise or other miss-happenings covered in the insurance contract.
Many people have understood the importance of a Life Insurance policy and that is the reason why this sector has emerged as one of the fastest growing finance segment in India.
Although many of us are aware of the importance of Life Insurance, not everyone knows that there are multiple types of Life Insurance products available in India and each of them comes with a variety of offerings.
What is Life Insurance?
Life Insurance is a mutual contract between a policyholder and insurer/ insurance company, wherein the insurer guarantees the payment of a sum assured (also known as death benefit) to named beneficiaries of the insured in case of he/she dies. The sum assured is paid based on the premium paid by the insured and policy contract.
Types of Life Insurance Policies In India
Life Insurance policy mainly has two basic types: term life policy and traditional whole life policy. In term life policy the policyholder pays a fixed amount of premium for a specific period whereas, in a whole life policy, the policyholder has to pay premiums till his/ her death.
List of Different types of insurance policies available in India: Risk & Benefits
Type of Insurance
Risk
Benefits
Term Insurance or Term Plan
No payout is provided to the insured or beneficiaries if the insured outlives the policy term
It is a pure death risk cover plan which offers high coverage or sum assured at low premiums
Whole Life Policy
If the insurance company changes their policies, goes bankrupt, or has some bad years, your return will be impacted negatively.
Investing a large amount of money in this single policy exposes you to a larger risk.
This policy covers whole life of the assured, or for up to 100 years in some cases.
This insurance policy also offers partial withdrawals on completion of certain premium payment term.
Endowment Plan
Protection is provided only for the specified period.
Premiums are usually much higher than a whole life or term insurance plans.
Many insurers do not provide the renewability facility for endowment policies.
Returns are usually low
If the assured outlives the term of the policy, the insurer offers the maturity benefit.
These plans may offer periodical bonuses (paid either on maturity of the policy or to the beneficiaries under death claim).
Endowment plans have surrender values, paid-up values, and loan values.
Unit Linked Insurance Plan
The returns cannot be guaranteed.
Returns are poor because a host of charges are associated with the scheme, such as administrative charges, mortality charges, and so on.
If the market does well, profits are good.
It provides mortality insurance cover.
ULIP investments are flexible, the policyholder can switch from one policy to another.
ULIP provides tax exemption benefits to the policyholders under section 80c.
Even the sum assured received by the nominee after the demise of the policyholder is tax free.
Money Back Policy
Tenure is very long (usually up to 20, 25, and 30 years).
Survival benefits paid at regular intervals during the policy’s tenure.
On maturity of the plan, the remaining part of the sum assured is paid (known as maturity benefit).
In case of death of the assured, insurer pays the entire Sum Assured to the beneficiaries.
Children’s Policy
Considering an additional charges such as premium allocation charges, and others, returns could be low return in the initial stage and lead to additional loss on leaving policy before tenure’s completion.
Helps in building the corpus for your child’s education and marriage.
Most child plans provide one time payout or annual instalments after the child turns 18.
Some child plans even waive off the payment of future premiums on demise of the life insured. The policy continues till policy’s maturity.
Annuity Plan/ Retirement Plan
Annuity plans are one of the most costly types of investments.
Most plans charge surrender penalty for early withdrawal
Guaranteed payout
Some annuity plans pay out a higher income than available standard annuities if during the occurrence of health issues.
Life Insurance
PreviousNext
th benefit
Many people have understood the importance of a Life Insurance policy and that is the reason why this sector has emerged as one of the fastest growing finance segment in India.
Although many of us are aware of the importance of Life Insurance, not everyone knows that there are multiple types of Life Insurance products available in India and each of them comes with a variety of offerings.
What is Life Insurance?
Life Insurance is a mutual contract between a policyholder and insurer/ insurance company, wherein the insurer guarantees the payment of a sum assured (also known as death benefit) to named beneficiaries of the insured in case of he/she dies. The sum assured is paid based on the premium paid by the insured and policy contract.
Types of Life Insurance Policies In India
Life Insurance policy mainly has two basic types: term life policy and traditional whole life policy. In term life policy the policyholder pays a fixed amount of premium for a specific period whereas, in a whole life policy, the policyholder has to pay premiums till his/ her death.
List of Different types of insurance policies available in India: Risk & Benefits
Type of Insurance
Risk
Benefits
Term Insurance or Term Plan
No payout is provided to the insured or beneficiaries if the insured outlives the policy term
It is a pure death risk cover plan which offers high coverage or sum assured at low premiums
Whole Life Policy
If the insurance company changes their policies, goes bankrupt, or has some bad years, your return will be impacted negatively.
Investing a large amount of money in this single policy exposes you to a larger risk.
This policy covers whole life of the assured, or for up to 100 years in some cases.
This insurance policy also offers partial withdrawals on completion of certain premium payment term.
Endowment Plan
Protection is provided only for the specified period.
Premiums are usually much higher than a whole life or term insurance plans.
Many insurers do not provide the renewability facility for endowment policies.
Returns are usually low
If the assured outlives the term of the policy, the insurer offers the maturity benefit.
These plans may offer periodical bonuses (paid either on maturity of the policy or to the beneficiaries under death claim).
Endowment plans have surrender values, paid-up values, and loan values.
Unit Linked Insurance Plan
The returns cannot be guaranteed.
Returns are poor because a host of charges are associated with the scheme, such as administrative charges, mortality charges, and so on.
If the market does well, profits are good.
It provides mortality insurance cover.
ULIP investments are flexible, the policyholder can switch from one policy to another.
ULIP provides tax exemption benefits to the policyholders under section 80c.
Even the sum assured received by the nominee after the demise of the policyholder is tax free.
Money Back Policy
Tenure is very long (usually up to 20, 25, and 30 years).
Survival benefits paid at regular intervals during the policy’s tenure.
On maturity of the plan, the remaining part of the sum assured is paid (known as maturity benefit).
In case of death of the assured, insurer pays the entire Sum Assured to the beneficiaries.
Children’s Policy
Considering an additional charges such as premium allocation charges, and others, returns could be low return in the initial stage and lead to additional loss on leaving policy before tenure’s completion.
Helps in building the corpus for your child’s education and marriage.
Most child plans provide one time payout or annual instalments after the child turns 18.
Some child plans even waive off the payment of future premiums on demise of the life insured. The policy continues till policy’s maturity.
Annuity Plan/ Retirement Plan
Annuity plans are one of the most costly types of investments.
Most plans charge surrender penalty for early withdrawal
Guaranteed payout
Some annuity plans pay out a higher income than available standard annuities if during the occurrence of health issues.
Life Insurance
PreviousNext
th benefit
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