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Insurance Types: Different Types of Life Insurance Policies & How to Compare Best Life Insurance Policy for Family

why do i need insurance coverage
Written by Rekha Rawat

To end your why about life insurance policies, in this article, I have covered the types of life insurance policies and how to compare best life insurance policy for the family.

The life insurance policy is the agreement between the insurer and company (which issue your policy) which pay out the policyholder’s family in case of illness or the death of the policyholder. There are types of insurance policies like term life insurance, endowment insurance, ULIP, money back, whole life insurance and pension plans.

Part 1. Different Types of Life Insurance Policies:

1. Term Life Insurance:

As name defines the insurance for a particular time period is term life insurance. The premium for this type of insurance policy is generally affordable and cheaper than other policies.

In specified time period if death occurs then you can claim for insurance. It provides high coverage with low premium. In the case of term life insurance, the premium and amount paid after death both are tax-free.

If a person commits suicide before completing the 1 year of insurance policy commencement, the coverage, in this case, becomes void. The nominee will get only the premium the policyholder paid up to the date deducting the expenses of the company for issuing the policy.

2. Endowment Insurance Plans:

This investment policy is a very attractive investment tool. It covers term life insurance plus guaranteed return at the maturity. Endowment insurance plans are expensive as the premium paying period is shorter.

It is a good option for saving as it returns bulk amount on maturity. It pays out the sum of money along with profit in death or survival cases.

3. Unit Linked Insurance Plan

This is an investment and the same time insurance plan. By purchasing ULIP you invest your amount in mutual funds, bonds, liquid funds, balanced and equity funds. The premium you pay is deducted by a company as policy charges and investment with the investment firm.

It is promised in the policy that if the policyholder dies, the full benefits will be paid to the nominee.

4. Money Back Life Insurance

Money back plans returns at regular interval to the policyholders. It is the systematic restructuring of your saving by providing insurance coverage. It generates a regular income, tax benefits, and money back plans to the policyholder.

5. Whole Life Insurance Policy

This plan serves you throughout the life. After your death, your nominee receives the sum. In this plan, you have to pay premium till your death. Premium is generally on annual basis. The term is not defined here so the policyholder enjoys the coverage throughout the life.

6. Pension Plans:

The people during his job tenure starts investing in this plan and after the retirement get the pension every month. On maturity, the policyholder can withdraw some portion of the sum for immediate financial needs. The remaining amount is used to purchase the annuity. By purchasing an annuity you are assured to get the pension on regular basis.

Part 2. Compare The Plans For Your Family:

As the responsibilities increase, your attention varies from one life insurance policy to others. The plan looks perfect before marriage seems different after marriage. So, how to choose the life insurance policy which suits your life best according to your future requirement?

There are many methods to choose wisely the plans according to your families need and requirements.

  • How Much You Earn?

The most important factor is how much you earn. It should not be the case when you’re investing more in policy than you can’t afford. Choose wisely what amount you are able to pay as a premium. Remember present comes first, then future. The wise decision of today will save your present and future as well.

  • How Much Can You Invest?

In addition, It is also considerable that the policy you occupy if not able to give the required coverage and your family suffers the burden. Choose the policy keeping in mind the policy provides the coverage to your family in which they feel safe after your death.

  • It Can Fulfill The Basic Necessity Of Your Family.

The first thing to keep in mind is a basic requirement of your family. The policy must cover the basic needs as such clothing, food, shield and education of your family after your death or critical illness.

So buying the whole life insurance plan is a better option as it has the security to provide you whole life coverage which can fulfill your families’ basic requirement regardless of when policyholder’s death occurs.

  • Second Thought Is Investments and Savings for a Better Life of Your Family

After securing the basic necessities, saving to provide better education, marriage, vehicle and house for your child is also a smart choice. Endowment plans and ULIP plans are best as they cover both life insurance and wealth creation.

  • Compare The Insurance Plans Offered By Different Companies:

Don’t stick to one company’s life insurance policy, go out and search thoroughly what different companies are offering in addition. Ask your agent to explain all type of insurance policies and their claims. It may be possible they have a better suited policy also for you and you are not aware of it.

  • Calculate The Life Coverage:

With the help of your agent or financial adviser, you can calculate the amount of life coverage also. It varies according to your income, lifestyle, dependents, debt if any, liability, and expenses. Choose the plan which gives you required coverage and an ideal solution according to your needs.

  • Approach For a Policy Smartly

We can’t predict the future requirements and situations. We can only choose it wisely to fulfill our later priorities. Today as a young unmarried person you find term plan attractive as it covers complete risk coverage under the specific period, after few years you may realize saving is also important.

Some policy firms or agents offer the policy which is convertible and some don’t. So Check out the policy’s norms terms & conditions whether it is convertible to other policy in future or not.

summary:

In conclusion, Keep all above-mentioned points in mind while purchasing the life insurance policy. The decision is not about purchasing the policy it is about securing your dear one ‘life. The only better decision can yield better results. Before buying the policy ask your agent or company to clear the points you are not comfortable in.

About the author

Rekha Rawat

Hi, it's Rekha here. I am an engineer and a writer by profession. I write impeccable contents. I am a self-disciplined person and deadlines encore me to do it ASAP. I love to adventure new fields, to create qualitative contents. I fathom the topic and explore it by my creative approach. I do simplistic approach, putting myself in reader's shoe, to reach out them. I write very succinct and captivating content and give efficient and correct information to my visitors.
I create content and make friendly relationship putting my end-audience in my mind.
I would love to hear from you here contactwithrekha@gmail.com

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