In life insurance, it is important to carefully choose a life policy that is suitable for our income and financial goals and companies that can offer full policy sums.
We have seen that insurance helps us during life and the afterlife. Life insurance is something most of us are very familiar with. Every household must have an insurance agent; Even if he didn’t understand what he was saying, we would have taken a policy or two for facial expressions.
And we used to call life insurance policy as LIC policies. Because earlier LIC (Life Insurance Corporation of India) was providing this service only. Today companies like HDFC, ICICI, Aditya Birla, and Tata have also started offering life insurance. Check out the various policies they offer.
Endowment Policy
This is a very popular policy among the previous generation. Because investment combines the two main things we can look for, security. It provides both life coverage and money to meet our financial goals. Sum Assured is paid to the nominee in case of death of the policyholder. If he survives beyond the policy term, the lump sum returned helps him fulfill his financial goals (own house, children’s education, and marriage).
Money Back Policy
A money-back policy works like an endowment policy. A difference in this is that a fixed amount is returned every fixed period. For example, a fifteen-year money-back policy may claim one-third of the amount every five years. Bonuses are available along with the balance at the end of the policy.
Ulip Policy
Both life coverage and investment benefits are available in this. But, instead of investing in low-risk projects, investing in a high-risk market increases profits. Investments are made in funds such as equity funds, debt funds, or a combination of both. These funds can be selected by the policyholder. As we get closer to our goal, we can secure more of our potential by shifting investments from risky equity funds to safer debt funds.
Whole Life Policy
While life insurance is generally not available above 70 years of age, under this policy we get coverage up to the age of 100. Thus we have insurance coverage till the time we pay the premium. The longer the years, the more money that can be added to it, and the more we can borrow from it at lower interest rates.
Term Insurance
This insurance which is very popular today is one of the simplest to have. There is no room for investment in this. As the entire premium goes towards coverage, you can get more coverage at a lower cost. For example, a 30-year-old non-smoker will pay a monthly premium of Rs.700/- for an insurance policy worth Rs.1 crore for the next thirty years. We can get coverage 15 – 20 times as much as our annual income. Due to this, even if the policyholder dies, his family does not suffer from a lack of comfort.
However, compensation is available only for the loss of life. If the policyholder is alive till the end of the policy term, there is no maturity benefit. Recently a scheme has also been introduced to refund the premium after the policy matures. But, the premium is high.
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