At some point in our lives, we have heard about the importance of having life insurance for financial security and protection. However, most people get caught up in different types of life insurance policies that the market has. It is entirely complicated as the market now has too many types of policies as well as the companies that offer them.
It’s simple to get caught up in the chaos and uncertainty and doubt your decision regarding the end product. Someone tells you about the maturity benefits of the endowment policy and how they benefited from it, whereas, your friends discuss how the term plan offers more coverage with lesser premium.
Four Different Types Of Life Insurance Policies
In this article, we have discussed some very common types of life insurance policies along with their benefits to make your decision less problematic and doubtful for you. Once you read this write-up, we hope you’ll gain confidence in choosing what’s right for you. Also, to find a life insurance policy, you must get in touch with a good insurance broker.
Types of Life Insurance Policy
- Term Insurance Plan
A term insurance plan has a policy of offering or covering a package for a certain amount of time or years. As the name suggests, this plan has a specified term to it. Moreover, the structure of the policy is easily understandable.
In this plan, an individual is supposed to pay a premium to the insurance company for several specific years, then in case of sudden or untimely death, the insurer promises to pay the amount to the family of that individual.
- Whole Life Insurance Plan
A whole life insurance plan offers individual coverage for the whole life. In this plan, an individual pays the premium amount on a regular basis, and in return, in case of sudden or untimely death, the insurer has to pay the money to the nominee of the policyholder. One benefit of a whole life insurance plan is that it includes a saving component when the assured sum is given.
- Endowment Policy
Endowment policy includes a combination of offering protection with savings. In this plan, if the premiums are paid with proper scheduling for a specific time period, the insurers have to pay the collected and assured sum to the nominee given by the policyholder. At the same time, if the policyholder survives till the term of the loan, they will receive the maturity benefit in form of a lump sum payout.
- Money Back Policy
Just like endowment policy, money-back policies also consist of the same combination of savings and protection. However, the basic advantage of signing this policy is, some portion of this sum that is being collected is given to the policyholder at regular intervals. This money-back return takes place during the policy tenure.
Furthermore, the remaining sum assured is paid as a maturity benefit with the bonus at the right time. This, however, is a great benefit which is not available for any other life insurance plan. Despite having the money-back benefits in the process, if the policyholder meets untimely death during the policy tenure, the sum will be handed over to the nominee.