Insurance that pays out a sum of money either on the death of the insured person or after a set period.
Life insurance is a protection against financial loss that would result from the premature death of an insured. The named beneficiary receives the proceeds and is thereby safeguarded from the financial impact of the death of the insured. The death benefit is paid by a life insurer in consideration for premium payments made by the insured. It provides them an amount in a lump sum or in installments to take care of their finances or to pay for your unpaid bank loans or debts.
Broad categories of Life insurance
Life insurance is divided into 2 types broadly
1. term life insurance
2. Investment insurance
Term life insurance –
In simple words is a cover for life. Fixed term or whole life. Basic insurance offers only death benefit. Few later developed variants offer survival benefits also, they are little costlier. One can avail additional riders which are like extension of cover based on other life risks one might face like critical illness, accidental death etc.
To further explain - Term life insurance or term assurance is life insurance that provides coverage at a fixed rate of payments for a limited period of time, the relevant term. After that period expires, coverage at the previous rate of premiums is no longer guaranteed and the client must either forgo coverage or potentially obtain further coverage with different payments or conditions. If the life insured dies during the term, the death benefit will be paid to the beneficiary. Term insurance is typically the least expensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis over a specific period of time. Term life insurance can be contrasted to permanent life insurance such as whole life, universal life, and variable universal life, which guarantee coverage at fixed premiums for the lifetime of the covered individual unless the policy is allowed to lapse.
Types of Termlife insurance –
1. Pure term life
2. Whole life
3. TROP Termlife with return of premium
4. Term with lumpsum payout
5. Term with increasing monthly payout
These are further explained in termlife page
This is goal based saving / growth plans with fixed or market dependent variable returns plans. They usually come with life cover and saving or investment component. That is they come with death benefit and/or survival benefit.
Types of Investment Life Insurance
Based on types of returns or payouts they are further classified into following categories
1. Endowment plans
2. Money back plans
3. Child plans
4. Pension plans
5. ULIP –unit linked insurance plans
These are further explained in individual pages of respective plans