Meaning: -Under Life
Insurance contract, the human life is insured against death, old age, sickness,
accident etc. Life Insurance contract is not a contract of indemnity.
Therefore, the insurer has to pay a definite sum on the maturity of the policy.
The sum has to be paid after the death of insured or at the expiry of the term.
Life
Insurance is not for the person who passes away,
but it is for those who survive. It is the responsibility of every member to
guard against the events that could affect the family in the unfortunate
circumstances of his demise. Thus, having a Life Insurance policy is very
vital.
Definition:
- Life Insurance can be defined as "A contract where an insurance company
undertakes the consideration of regular payment of premium to pay certain sum
of money to the assured on maturity of policy or death, whichever is earlier".
Types
of Life Insurance Policy:
1.
Whole
Life Policy:
-The whole life of a person is insured under this
policy. The insured cannot receive the money from the insurance company till he
is alive. The rate of premium is normally very low. The money becomes payable
on the death of the insured person to the nominee or the legal heir of the
deceased policy holder.
2.
Endowment
Insurance Policy:
-Under this policy, insurance is taken for a specific period. The sum
assured along with bonus is given on his death to the dependents of family or
on the expiry of the specific period; the insured himself receives the sum
assured along with bonus. It is a popular plan as it protects the family of the
deceased or provided old age pension to the insured.
3.
Term
Insurance Policy:
-Term insurance policy is taken for a specific period.
It has lowest premium among all Insurance plans. Premium is fixed and does not
change during the term of the policy. In case of an untimely death, the
dependents will receive the benefit amount specified in the term life insurance
agreement.
4.
Money-Back
Policy:
-Money-back policy provides a regular percentage of
the sum assured during the life time of the policy and also guarantee the
benefit of full sum assured in the event of the death of the insured to the
dependents of the family. This policy is for those people who like to have
savings and Insurance Cover.
5.
Joint
Life Policy:
-Under Joint Life Policy, two or more persons are jointly assured. The person
who takes joint life policy must have insurable interest in each other. It is
useful for individuals having common interest, requiring joint safety and
security to their lives. It can be taken by the partners of the firm or husband
and wife.
6.
Annual
Policy:
-The insured has to pay the premium in lump
sum or installments over a certain period of time. The insured will receive
back a specific sum periodically from a specified date onwards, either for life
or for a fixed number of years. Generally, life annuity (pension) is opted
(choose) by a person having surplus wealth and wants to use this money after
his retirement.
7.
Pension
Plan Policy:
-Pension policy is different from all other forms
of life insurance, as it does not provide any life insurance cover but merely
offers a guaranteed income either for a life or for a certain period.
(therefore, this type of insurance is taken so as to get income after
retirement)
