Types of Life Insurance policies
The Document containing the written contract between the insurer and the insured along with the terms and conditions of insurance is called the Policy. After the proposal from the filed by the insured and the insurer accepts the from and the premium, a policy is issued to the insurer.
People have different requirements and therefore they would like a policy to fulfill all their needs. The needs of people for life insurance can be family needs, children needs, old age and special needs. To meet the needs of people the insurance nave developed different types of products such as Whole Life Assurance, Endowment type plans, combination of whole life and endowment type plans, Children’s assurance plans and Annuity plans.
Some of these are explained below;
(i) WHOLE LIFE POLICY:
In this kind of policy, the amount payable to the jnsured will not be paid before the death of the assured. The sum then becomes payable only to the beneficiaries or heir of the deceased. The premium will be payable for a fixed period (20-30 years) or for the whole life of the assured. If the premium is payable for a fixed period, the policy will continue till the death of the assured.
(ii) Endowment life Assurance policy:
The insurer (insurance company) undertakes to pay a specified sum when the insured attains a particular age or on his death whichever is earlier. The sum is payable to his legal heir/s or nominee named their in case of death of the assured. Otherwise, the sum will be paid to the assured after a fixed period i.e., till he/she attains a particular age. Thus the endowment policy matures after a limited number of years.
(iii) Joint Life Policy:
This policy is taken up by two or more persons. The premium is paid jointly or by either of them in, instalments or in lumpsum. The assured sum or policy money is payable upon the death of any person to the other survivors or survivor. Usually this policy is taken up by husband and wife jointly or by two partners in a partnership firm where the amount is payable to the survivors on the death of either of the two.
(Iv) Annuity Policy:
Under this policy the assured sum or policy money is payable after the assured a certain age in monthly, quarterly, half yearly or annual instalments. The premium is paid in instalments over a certain period or single premium may be paid by the assured.
(v) Children’s Endowment Policy:
This policy is taken up by a person for his/her children to meet the expenses of their education or marriage. The agreement states that a certain sum will be paid by the insurer when the children attain a particular age. However no premium will be paid if he dies before the maturity of the policy.
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