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What are the basic types of insurance policies available to us?

Term insurance:

These are the most elementary form of life insurance. Term insurances provide life cover with no savings or profit component. The term insurance plan is the cheapest of all other insurance plans out there because the insurance premiums too are very cheap when compared to the other kinds of insurances out in the market. The lower insurance premiums are because of the pure life coer that are given by the online term insurances. The fixed sum that is assured is given to the beneficiaries if the policy holder expires during the policy term however if the death of the insurance policy holder doesn’t happen, no money is given to the beneficiaries.

Endowment plans

The endowment plans are very different from the term insurance particularly in the maturity benefit aspect. Term plan pays out the maturity amount along with profits earned only on the occasssion of the death pf the insurance policy holder and Endowment plans pay put the sum insured in the case of the survival or the death of the policy holder. While this definitely can be taken as a benefit, the down idea of it is that these endowment plans have a greater premium, higher fees and expenses. The profits are the premiums that we invested in the asset markets as equities and debts.

Unit link insurance plans

The unit link insurance plan is a little tweak on the conventional term insurance, they pay out the assured sum or the investment portfolio only if it is higher on maturity. The performance of the unit link insurance plans are linked to the markets. The insurance policy holders can select the allocation to the stock and debts. The value of the investment portfolio happens through the net asset value.

Whole life policy

Such types of insurance policy covers the insurance holder’s whole life. The main benefit of the whole life insurance policy as the name suggest is that the value of the cover is undefined and therefore the benefit of the insurance is enjoyed by the insurance policy holder for his entire life. The policy holder pays premiums until his death and on the occasion of his death the corpus is paid to his beneficiaries or his family. The expiration of the policy happens only in case of an eventuality because there is no pre-defined tenure of the policy.

Money back policy

This kind of insurance policy is a variant of the endowment policy. It gives out periodic payment over the entire term of the policy. A part of the assured sum is paid out at regular intervals. If the policy holder lives through out the, he is entitled to the balance sum assured, in the occasion of the death of the policy holder the beneficiary gets the complete sum assured.

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