A Thread on life insurance polices
1/ Life Insurance is a contract between an insured (policyholder) and an insurer (insurance company), where the insurer promises to pay a sum of money in exchange for a premium after a set period or upon the death of an insured person.
2/ There are many policies which we are offered by the insurance companies and generally are mis-sold. So, here is the meaning of each policy with their main features.
3/ Whole Life Insurance :- It is the oldest type of life insurance wherein premium is paid by the assured throughout his life-time and the sum assured is paid to the beneficiary or nominee on the death of the policyholder.
4/ Generally, the maturity of the policy is 100 year. But, premium is very high and assured may find it very difficult to continue the premium payment during his old age.
5/ Endowment Policies :- This policy covers risk for a certain period of time i.e., up to maturity period and at the end of which the sum assured is paid back to the assured, along with a bonus (if chosen). If assured dies, then the sum assured is paid to the beneficiary.
6/ Bonus option is not necessary to choose. It's up to the insured whether to choose or not. If chosen, the premium will be higher. Also, check the returns of the policy and approximately the returns are 3 to 5% during the tenure of the policy which doesn’t beat the inflation.
7/ Money Back Policies :- It is the variant of Endowment policy. This policy helps the insured person to get a percentage of sum assured at regular intervals, instead of getting the lump sum amount at the end of the term.
8/ This policy is suitable for risk-averse individuals who wish to save through an insurance plan and also maintain liquidity throughout.
9/ If the insured survives till the expiry of the maturity period, the survival benefits are deducted from the maturity value & the balance amount is paid. In case of death of the insured person, the nominee gets the entire sum assured and the survival benefits are not deducted.
10/ Children Policy :- This policy is taken out on the life of the children where the parent is proposer. The parent will get funds when children reach various stages as mentioned in policy like when a child becomes an adult, postgraduate, etc.
11/ The policy carries high premium & low returns. The biggest advantage is Waiver of Payment Rider. This rider gives the benefit in case of unfortunate death of parent/proposer during the policy and premium need not to be paid but the insurance company pay the remaining premium.
12/ Annuity :- The policy is a contract between the policyholder and insurer in which the insured gets a fixed amount for lifetime or specific number of years. The person who pays an annuity premium is called an annuitant and insurer is called an annuity provider.
13/ Two Types of Annuity - (a) Deferred Payments : In this option, the annuitant pays a premium continuously till the retirement age (as mentioned in the policy) and gets withdrawal after the retirement.
14/ (b) Immediate Payment : In this option, the insured gives lump sum money to the insurer and gets withdrawal immediately. Generally, taken by the person who is near their retirement or retired and wants steady income from their saved corpus.
15/ Unit Linked Insurance Plans :- This policy is a combination of insurance protection with investment and allows the insured the flexibility to choose on how much premium they want to invest and also, check the charges deducted by insurer. Two types of ULIP :
16/ (a) Type 1 : In this, the nominee gets higher of the sum assured or fund value in case of death of policyholder.

(b) Type 2 : In this option, the nominee gets both the sum assured and fund value in case of death of the policyholder. But, the premium is higher in this case.
17/ Term Insurance :- This policy is the pure life insurance in which the insurer provides the full sum assured in case of death of the policyholder before the maturity ends. If the insured lives beyond the period stated in the policy, no payment is to be made by the insurer.
18/ This policy is slowly gaining popularity among Indian population as they understand its advantages like cheap premium and a tool for succession planning.
19/ As you have understood, the different types of policies offered by insurance companies, I recommend to take TERM INSURANCE. Because, all the policies are combined with insurance protection and investment except TERM Insurance.
20/ I will soon share the full details about the term insurance, what to check while buying the policy, when to buy, etc. So, stay connected with me.

Disclaimer - I’m not an advisor, I share my thoughts on proper analysis.
I am tagging you, not for follower count, rather to educate innocent & ignorant Individuals.

@dmuthuk @themahavir @AnyBodyCanFly @neerajarora91 @adi2five @FI_InvestIndia

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