In today’s world, living is expensive and life is uncertain. Life’s end will not put an end to the ever-increasing expenses of a family. But insurance will help smoothen out the bumps. So, one still needs to put a financial value to one’s life in order to protect their own as well as a loved one’s future. Life Insurance is a way of guarantying that little extra income post retirement and in the case of death, it means some financial aid for the family left behind.
Considerations For Life Insurance
Payout at the time of maturity is obviously the most important consideration while looking for a life insurance policy. And yet, there is one more aspect that you need to consider. And that is your current standard of living and your expectation of the same in future, for not just yourself but your dependents or survivors as well. This will include things like fees for school and college education, relocation expenses, the marriage of children etc. Hence, the most sensible thing would be to revisit and reanalyze your life insurance policy whenever a big event occurs in the family. This big event could be a birth or a death, purchase of property etc.
Types Of Life Insurance
The most popular products offered under the cap of life insurance are:
- Term Insurance – the most basic form of life insurance is Term Insurance. In term insurance, an individual opts for a pure life cover. If the insured dies during the policy term then a pre-determined sum of money is paid to his or her survivors or beneficiaries. This amount is stated in the policy. And if the policyholder survives then there is no payout. Its period of maturity varies anywhere between 1-30 years.
- Endowment Plans – it is a contract of life insurance that pays an assured amount on either its maturity or death of the insured. For endowment policies, the typical period of maturity is 10-20 years.
- Money Back Life Insurance – also known as a money back policy. In this type of Life Insurance policy, a part of the assured amount is paid out at predetermined, regular intervals. In case, the policyholder survives the whole term, the balance of the assured amount is paid to him. In the case of death of the insured, the beneficiary gets the full sum guaranteed.
- ULIP – also known as Unit Linked Insurance Plan it is a type of policy that is linked to the markets. The individual can decide how the funds are allocated to the stock or the debt market. In this case, the worth of the investment portfolio is captured through the Net Asset Value. This is also known as the NAV. Hence, ULIP’s are a blend of insurance and investment.
- Whole Life Insurance – as the name itself suggests this type of life insurance covers the insured for his or her whole life. In return for a regular premium, paid by the insured or the policyholder until the time of death, the principal sum is paid to the survivors or the beneficiary.