Life insurance is a type of contract between life insurer and the policyholder. In this, the insurer promises to pay a sum assured amount to the beneficiary in return of premium upon the death of the policyholder. Basically, in this the policyholder pays the premium to insurer regularly or in lump-sum. In some plans, extra expenses such as funeral expense are covered. Life insurance plans assist in providing financial protection to the policyholders and their families.
Life insurance is that alternative arrangement and a secondary plan which would keep your family financially secure for the time being. Term Insurance plans ensure financial stability to the insured in case of any unprecedented events. But in order to find the best insurance plan suiting your need, it's important to compare term policy and term insurance online to find out the best plan.
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What is Life insurance?
Life insurance is a financial tool that comes into effect and stands as the financial protection system of the family after a definite period of time or undefined one in case of disability and death as the case may be.
In legal terms, it is the contract between the insurance policyholder and the insurance company that the policyholder will be provided financial protection as per the terms defined in the insurance policy signed.
What does it cover?
Life insurance provides economic coverage for your family if you passed away during the definite time period. It provides the sum assured amount to the beneficiary as stated in the policy document. Life insurance coverage is usually used as income substitutes to pay off any amount overdue and cover your loved ones living expenses.
Types Of Life Insurance Plan
Term Insurance: Term Insurance is the most reasonable form of life insurance plan. It provides you high-risk coverage in less premium amount. In case if you die, then the beneficiary or nominee will get the sum assured amount.
Whole Life insurance: This policy covers you for whole life and thus requires premium until you die. Your nominee gets the full sum assured in the event of your death.
Endowment Plan: It is different from term plan, in this you will receive the sum assured along with the profits in both the cases- death and survival. This plan usually charges higher premium which is further invested in Equity and Debt.
Unit-Linked Plan: Generally, this plan provides two benefits, first is the investment and another is insurance coverage. The selection of an allocation of investments in the stock market is entirely upon you. The sum assured is paid out in the event of death.
Money Back Plan: This is an alternative of endowment plan. A portion of the sum assured is paid out at customary intervals. In case you survive, you get the balance sum assured and if you die, your nominee gets the full sum assured.
Checking for a best life insurance plan? Prior to it, you must be aware of your needs for taking life insurance plan. How much and from where to purchase are the common questions that arise during the scouting process. Planning for the best investment plan can protect you from unseen financial difficulties. It even secures your family in the event of any unpleasant incident. But the task of arriving at the most favorable insurance plan is quite tricky and can perplex even the best of minds.
If we think practically, then the requirement of having an insurance plan changes every few years due to increment in responsibilities. A bachelor with his working father does not have much requirement for a life insurance plan. However, once he gets married the need, of having a suitable insurance policy will arise. For a married person with kids and dependant parents, it becomes a must-have. Every policyholder requires reviewing his plan on a regular basis just to align them with the current needs.
Major factors such as marital status, earning power of the person, age in the family etc have to be measured for your new life insurance needs. You must plan wisely for your life insurance, it should neither be an excess of your necessities, nor less than what should you have. If you are insured for less, then your family may have to bear the burden of expenses in case you are not around to take care of them. Likewise, with an excess insurance you would waste a lot of your savings that you can otherwise use for some other purpose.