State four life insurance policies?
Solution:
Types of life insurance policies:
1) Whole Life Policy:
Under this policy, the whole life of a person is insured. The insured cannot receive money from the insurance company until he is alive. The rate of premium is normally low. The money becomes payable on the death of the insured person to the nominee or the legal heir of the deceased policyholder.
2) Endowment Insurance Policy:
Insurance is taken for a specific period under this policy. The sum assured along with bonus is given on the death of the insured to dependents or on the expiry of the specific period, to the insured.
3) Term Insurance Policy:
The term insurance policy is taken for a specific period. Term insurance policy has the lowest premium among all insurance policies. Premium is fixed and does not change during the term of the policy. In case of untimely death, the dependents will receive the benefit amount specified in the term life insurance agreement.
4) Annuity Policy:
The insured has to pay the premium in a lump sum or in 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. It is like a pension payment scheme.
