Life Insurance
Life Insurance Provides financial protection to your family after life. Among various insurance products, LIFE INSURANCE has been the most popular. It is an important part of financial planning. Life insurance provides financial protection to the family in case of the death of the breadwinner of the family. It enables the family to lead the same standard of life even after the demise of the head of the family.
TYPE OF LIFE INSURANCE POLICIES
Endowment Policy
In this policy the sum assured is paid in both the situations i.e. death or survival. The amount is paid either on maturity or death of the policyholder.
Money Back Policy
In this policy the policyholder receives a certain percentage of sum assured at regular intervals say 5,10,15,20 years. In case of survival remaining amount along with bonus is paid on maturity. In case of death sum assured is paid.
Pension Plan
In this plan annuity is paid to the policyholder against the accumulated fund at the end of the term of the plan. Policyholders can also obtain the accumulated amount in a lump sum in place of the annuity.
Whole Life Policy
This policy provides coverage throughout the life of the policyholder. The premium is paid for certain number of years only say for 20 years.
Unit Linked Insurance Plan
In this plan the amount of premium is invested in the Equities and debt instruments. Here, return is not guaranteed and is market-driven but offers to build a good sum at the end of the plan.
Buying Decision Basics
Before buying a policy track record of the company is to be checked about its promoters, claim settlement ratio, customer service, etc.
Step 2: Terms and Conditions of the Policy
Terms and Conditions of the policy are to be read carefully – whether any exclusions are there or not.
Step 3: Free Look Period
Some companies offer a free look period from 15- 30 days. The policyholder has an option to return the policy if not satisfied within the free look period.
Step 4: Premium Payment Options
Company offers to pay a premium in Monthly, Quarterly, Half yearly, and yearly instalments. The company also offers a discount on Yearly payment of premium. Payment option to be chosen based on income.
Step 5: Claim Settlement Ratio
Claim settlement ratio is an indicator of companies’ promptness of settlement of claims. The higher the ratio, the better is the company. This can be checked on the web site of the companies.