Life Insurance is a considerable and efficient financial tool to ensure the security of financial obligations in case of death or another tragedy that happens to the policyholder. Life Insurance is a legal contract between an insurance company and an insurance policyholder to provide financial protection among policyholders or nominees against the premium. However, it is less known among potential clients that there are different types of life insurance policy to get financial support according to their unique needs. The unique features and differences between different Life Insurance policies are discussed below.
Life Insurance Policy
A life insurance policy is a legal contract created between the insurance provider and insurance holder to support financial obligations like home loans, education loans, debt, etc. after the demise of the client or maturity of the policy i.e., completion of fixed duration in exchange of decided premium amount. Life insurance is popular because it offers assured income benefits after the demise of the client. The different type of life insurance also offers investment opportunities and other benefits for customers. A life insurance policy is good and also provides a chance to build wealth and provide financial security among the loved ones of the client in their absence or death.
Types of Life Insurance Policy
Term Insurance policy
Term insurance is a popular Life Insurance product that offers financial coverage among customers for a specific duration. Term insurance is borrowed by clients for a specific duration and in case of their death, the benefits are paid to the beneficiary by the insurance company. Term insurance is beneficial for clients because it is affordable and simpler than other forms of life insurance. However, insurance does not include the features of cash value and relies on the expiration date. Term insurance is popular among working individuals because it demands low monthly premiums and covers important financial obligation duration like education expenses and mortgages.
ULIPs- Unit Linked Insurance policy
ULIP is a type of insurance plan which provides several benefits to support the long-term goals of the client by offering dual benefits of investment. The dual benefit feature of ULIP includes are portion of the premium paid by customers in a variety of investment funds related to the market and the remaining part utilised by the insurance company to cover the life insurance benefits for the client. The best advantages of ULIP include its flexibility and customisation. The ULIP holders are allowed to make payments of premiums flexibly and the money can be moved into debt funds or equity funds based on a client’s preferences and needs.
Endowment Insurance policy
An endowment plan is an insurance policy which offers financial growth options and life coverage against the premium paid by the client. The number of returns is fixed for a particular duration offered by the Endowment policy among clients that can be utilised by individuals for various personal goals like child education, buying a house, starting a new business, marriage and many more. The endowment insurance policy covers benefits for a specific number of years or the target age of the policyholder decided in the policy terms. An endowment insurance policy also ensures the guaranteed return of a large payout if policy policyholder outlives the maturity date.
Money Back Insurance policy
A moneyback insurance policy is a financial tool offered by the insurance company in which a regular income is received by the client throughout the policy term. The money-back insurance policy also provides a lump sum amount at the time of maturity making it one of the most efficient insurance plans to manage financial security and liquidity. The money-back insurance policy is appropriate for individuals looking for consistent financial security and liquidity throughout different stages of their lives. Money-back insurance policy offers survival benefits at regular intervals, maturity benefits after the end of the policy tenure, death benefits in case of policyholder demises and an additional bonus
Whole Life Insurance policy
A whole life insurance policy is a permanent type of insurance policy in which beneficiaries are bound to pay a specific amount of premium and get a specific return at the time of the insured demise. Whole life insurance is beneficial for policyholders because it provides complete coverage for the entire life of the insured. This type of insurance policy offers several tax-saving options with level premiums and also allows policyholders to borrow money in times of emergencies like terminal illness.
Child Insurance policy
The child insurance policy refers to an investment cum insurance process offered by the insurance company in which the financial safety of the child of the insured is covered to support them in achieving their life goals. Child insurance policy is beneficial for children in case of sudden demise of guardians and it also provides tax benefits. This insurance policy does not include any loss of a principal investment provides educational support to the child and helps in achieving their future goals.
Retirement Insurance policy
The retirement insurance policy also known as a pension plan is designed to fulfill the needs of an individual after their retirement. This insurance policy helps retired people with a Corpus amount and creates a regular income for policyholders as a pension. The retirement insurance policy is appropriate for individuals who want to secure their post-retirement life and offers a stress-free life. The retirement insurance policy offers a chance to enjoy golden years of life after retirement without stressing about financial boundaries.
Conclusion
Life insurance policies have several benefits to offer among the policyholder and beneficiaries considering their financial obligations and in case of any tragedy. The above details of different types of life insurance policies can be utilised by potential policyholders to explore their differences and select the most suitable type of life insurance for their needs. Each type of Life Insurance policy has different features and benefits for policyholders that can provide financial security throughout the life of the policyholder or for a specific duration along with investment opportunities in exchange for a premium amount.
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