| Why You Need Life Insurance?
|
| We are generally reluctant to think about the
need for life insurance but there is a need to have it, with us in
case something does go wrong. You need life insurance because it |
 |
Provide continuous flow of
funds for the living spouse. |
|
Allocate income funds for the children's
education. |
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Provide a retirement income throughout
old age. |
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Provide a reliable savings plan for the
future. |
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Supplement income when earning power is
destroyed by illness of accidents, such as covering medical
expenses. |
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Furnish surplus earnings for the investors
should disaster strike. |
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| |
| Type of Life Insurance |
| Term Insurance Policy |
In
case of death: Term insurance is the insurance with
temporary protection period of 10, 15, 20, 25 or 30 years, at
the end of which the policy expires. The nominee (family) of
the insured will be entitled to the death benefit (sum assured)
only in case of insured’s death within the period specified
In case of survival: Term insurance policies have no
cash value or savings element. So if at the expiry of the term
the insured survives, he will not be entitled to anything. |
|
| |
| According to Investment made |
| Traditional:
The portion for premium set aside for investment is invested
in fixed incoming bearing securities. There is almost nil or
negligent allocation towards equity or equity linked securities
in such plan. Hence lower risk and returns. |
| Unit
Linked Insurance Plan (ULIP): A ULIP is a life insurance
policy which provides a combination of risk cover and investment
in equity and debt markets. Unlike traditional plans, the ups
and downs of share market have a direct effect on the performance
of the ULIPs. |
|
| Endowment Policy |
| In
case of death: It pays the face amount of insurance
if the insured dies within the specified period |
| In case
of survival: The face amount is paid to the policy
holder at the end of the endowment period. |
|
| |
| Whole Life Policy |
In contrast to the
term insurance, which provides short term protection, whole life insurance
is a cash-value policy that provides life time protection. There is
no fixed end date for the policy, as there is with term life insurance.
When the policy holder dies, the face value of the policy, known as
a death benefit, is paid to the person or persons named in the life
insurance policy.
Post-retirement years need is not considered. It doesn't take into
account a person's increasing needs either. While the insured buys
the policy at a young age, his requirements increase over time. By
the time he dies, the value of the sum assured is too low to meet
his family's needs. As a result of these drawbacks, insurance firms
now offer either a modified Whole Life Policy or combine in with another
type of policy |
| |
| Money Back Policy |
As the name suggests, these policies are structured
to provide sums required as anticipated expenses (marriage, education,
etc) over a stipulated period of time. The premium is payable for
a particular period of time.
In case of survival: A portion of the sum assured is payable at regular
intervals. On survival the remainder of the sum assured is payable.
In case of death: the full sum assured is payable to the insured. |
| |
| Annuities And Pension |
| Pension policies provide
a regular sum of money to the insured or to his nominee for a fixed
period. |
| The
insured has the option of selecting when and for how long (term)
she or he would like to receive the pension amount. |
| In case of death:
the nominee has the option of taking a lump sum amount or receiving
a regular pension for the remaining term of the policy. |
| It is advisable
to have a portfolio of policies with varied benefits, as a single
policy cannot meet all your insurance objectives. |
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