We all have heard about the importance of life insurance from various sources. And, at some point, many of us have even thought of getting one. But the problem is that there are many types of life insurance available for us and we don’t know how to select one.
One of your friends may have told you about the importance or benefits of an endowment policy, but you have read that term insurance provides the best coverage. In this chaos, we end up making the wrong decision by not getting the right policy.
So to avoid such instances further let’s dive in and understand the different types of life insurance.
What is Life Insurance Policy?
To term it in simple words, Life Insurance is an agreement between the insuring organization and the policyholder. The policyholder pays a sum (premium) to the company for several limited years. And in return, the organization promises to pay the assured sum to the nominee after the untimely death of the policyholder.
Here are the various life insurance policies you need to know about.
Types of Life Insurance Policies
Term Life Insurance – The term insurance coverage is simple to understand, easy to apply, and buy. It is an insurance that provides dependable coverage at excellent prices. In this insurance, you pay the premium to the company, and they will promise to pay the assured sum to the nominee.
- In term life insurance, you pay less premium and enjoy dependable coverage
- TROP, which is a type of term insurance, comes with a maturity benefit at the end of the policy.
Whole Life Insurance – It is also known as a permanent type of life insurance, where premiums for the policy don’t change over time. And like most similar life insurances, it also provides a maturity benefit to the policyholder.
- Like other policies, it doesn’t have a defined term, and the sum is paid to the dependent upon death.
- Apart from the insurance assured upon death, it also accumulates cash over time. You can re-invest it and remit the cash during your lifetime.
Endowment policy – This policy protects the holder and also accumulates the cash over time. If the premium is paid on time, in case of untimely death, the nominee will get the promised amount. But, if the holder survives the period for the insurance, they will receive the savings as maturity benefit.
- Apart from a saving component, you can also take a loan against the savings in case of an emergency.
Moneyback Policy – It is just like the Endowment policy, but the key difference is that you get paid an assured sum at regular intervals during the tenure. And the remaining amount will be given back to the policyholder at the end of the policy tenure. In case of the sudden demise of the policyholder, the money goes to the nominee in the policy.
- The most significant advantage of this policy is the money it provides at regular intervals.
These are the types of life insurance you should know about. On the off chance that you are planning to get one, give it a good read, and then make your mind.