What Type of Life Insurance Policy Should You Get?

The only thing people can do is prepare and make sure that there are no regrets and problems left after one’s time finally comes. The most that suffer in times of death are the family and loved ones. So it is important to make sure that before one dies, they are certain of the fact that their loved ones and family is financially viable and stable. In such cases, life insurance policies help a lot.

What is a life insurance policy?

To put In simple words, life insurance policies are contracts that are made with an insurance company. In this contract, the insured individual makes premium payments to the company in accordance to the clauses and terms stated in the contract and in return, the affiliated insurance company provides the family and the recipients mentioned in the policy a lump sum payment upon the death or sudden passing of the insured individual. This payment of lump sum amount upon the death of the insured is known as ‘Death benefit”.

There are a number of insurance companies who have different life insurance plans in India. People according to theory requirements can choose which type of life insurance policy they wish to have.

Known the kind of life insurance you need

There are a lot of different types of plans and policies for life insurance; it is important to know which type of life insurance should one get so that their family and loved ones can be better secured.  The basic types of a life insurance policy are term permanent and employer-sponsored.

Term life insurance: As the name suggests, term life insurance is a type of insurance policy that covers the insured person for a certain term or period. If the insured individual passes or dies within the stipulated time for which the policy cover is active, then the beneficiaries and recipients mentioned in the policy will receive the death benefit from the insuring company. If the insured individual manages to escape death and the term is over, then the policy will end, and the contract between the insured individual and the company will cease to exit until and unless an extension is made.

Permanent life insurance: Permanent life insurance is a life insurance policy that provides the individual insured coverage for life. Simply put, this type of life insurance is permanent and is applicable till the death of the insured individual. This also means that as long as the individual is alive and well. He or she must continue to make premium payments to the insuring company. Apart from the traditional death benefit that the policy provides, permanent life insurance policies also can accumulate cash value. This means that a portion of the premium payments that are made for the life insurance will be used for earning money through dividends, inters and investment earnings. People who have permanent life insurance can also have the benefit of borrowing cash value when required and this loan is usually tax-free in some insurance companies. Though it must be kept on mind that any load and borrowings or withdrawals from the cash value can, in fact, reduce the total amount of death benefit if not paid back in due course of time.
If it happens that the insured no longer wishes to keep the permanent life insurance and wants to end the policy, then he or she will often have to pay a certain amount of remuneration as a cancellation fee.

Employer-Sponsored Life Insurance: This type of life insurance is not a very well known type of insurance. Like the name, this life insurance policy and plan is related to one’s work life. Normally when a person is an employee in an institution or an organization, he or she is under some sort of life insurance that is sponsored by their employer. This is also a simplistic one as this type of life insurance is one applicable as long as the individual is employed at their current job. If the employee were to change jobs or the location of his or endeavors, then the life insurance policy will become null and void. This type of life insurance is not applicable after retirement and is only active as long as the individual is employed.

These are the basic types of life insurance policies that insurance companies like ICICI Prudential have to offer. Depending on goals and their personal and financial situation, one can choose from these types of life insurance policies. While choosing a particular type of life insurance policy, one can also take the help and assistance of an insurance agent from the company to facilitate the decision-making process. Having a professional’s advice will help one make a smarter choice regarding which life insurance policy to take and will thus help the beneficiaries in the event of an unforeseen death.

People don’t think about life insurance that much but when they do, they should keep in mind the goals and aspirations they have in order to choose the right type of life insurance policy.

There are many life insurance companies with different life insurance policies. One can look up the different policies online in the company websites and compare the policies with each other. Comparing policies will allow one to know which type of life insurance policy suits their needs and desires the best and will help them secure a substantial amount of death benefits for their loved ones and family members.