Life insurance is an bond between an individual and insurance company. In which the individual pays some amount of money to the company in order to get benefits after his death.
Life insurance is an agreement between the insured and the insurer. The person who insures his life is known as insured and the company which is offering insurance is known as insurer. In this contract the insured requires to pay some amount of money at regular intervals of time known as premium. In exchange, the insurer gives some benefits to an individual over life time or gives some amount of money to the beneficiary of the policy after insured death.
Life insurance policies are classified based upon some parameters like benefits coverage, number of years, premium and other regulations etc.
Life insurances are mainly divided into two types, they are,
Term life insurance is a type of life insurance policy for a particular period of time. In term life insurance policies the insured need to pay premiums for fixed period. The premiums remain same over the period. The terms and conditions of this type of life insurance policies are that the insurance amount will be paid only on the death of the insured. In case the insured does not die during the term of the insurance, the insurance amount does not get carried over. That means, after the term of the insurance the insured will not get any benefits or the insurance amount. The insurance premium of term insurance increases with respect to the increase in age of the insured.
These policies are tax free.
Term life insurance policies are divided into two types, they are
Permanent life insurance policies are a type of insurance policies. It gives benefits for the individual for the whole life. These policies does not have maturity time, unless the policy holder fails to pay the premiums.
The various types of permanent life insurances are as follows
Life insurance is an agreement between the insured and the insurer. The person who insures his life is known as insured and the company which is offering insurance is known as insurer. In this contract the insured requires to pay some amount of money at regular intervals of time known as premium. In exchange, the insurer gives some benefits to an individual over life time or gives some amount of money to the beneficiary of the policy after insured death.
Life insurance policies are classified based upon some parameters like benefits coverage, number of years, premium and other regulations etc.
Life insurances are mainly divided into two types, they are,
- Term life insurances
- Permanent life insurances
Term life insurance is a type of life insurance policy for a particular period of time. In term life insurance policies the insured need to pay premiums for fixed period. The premiums remain same over the period. The terms and conditions of this type of life insurance policies are that the insurance amount will be paid only on the death of the insured. In case the insured does not die during the term of the insurance, the insurance amount does not get carried over. That means, after the term of the insurance the insured will not get any benefits or the insurance amount. The insurance premium of term insurance increases with respect to the increase in age of the insured.
These policies are tax free.
Term life insurance policies are divided into two types, they are
- Group term life insurances: Generally these policies are taken by employer to his employees, in which the employer pays premiums to the insurance company. Either employer pays these premiums from business money or it can be deducted from individual employees salary. This type of insurance is gaining significance in the developed countries.
- Level Term life insurances: Level term life insurance means that the death benefits does not change during the term of life insurance coverage. In this policy the premium amounts will be same. And premium are paid for a fixed period.
Permanent life insurance policies are a type of insurance policies. It gives benefits for the individual for the whole life. These policies does not have maturity time, unless the policy holder fails to pay the premiums.
The various types of permanent life insurances are as follows
- Whole life insurance policy: This policy provides benefits to the individuals for the whole life. This policy gives guaranteed death benefits, and guaranteed cash value for the individual. In these type of policies insured may have the option to rise substantial investment on his premium amounts. Because here the insured pays premiums for a long period. The advantage of this policy is, insured can gets continuous benefits till the death of insured.
- Universal life insurance policy: Universal life insurance policy is a very flexible option for the insured. In this policy insured has flexible premium options and death benefits. Flexible premium and death benefits means insured gets a chance to increase or decrease his premium amounts at any time and also as same for death benefits.
- Variable universal life insurance policy: This policy allows the insurance holder to make investment by his premiums. Here the insured has flexibility for their premiums. The insurance holder is responsible for the investment made by the premiums.
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