Life Insurance: If you are going to buy life insurance for the first time, then you will get to hear and read many types of terms. Before buying any financial product, it is wise to know about all the aspects associated with it. There are many types of life insurance and various terms are associated with it, here we will know about such term.
Term Insurance Plan: You can buy it for a fixed tenure (10, 20 or 30). There is no maturity benefit after the premium has been paid till the term, but in case of death of the policyholder during the term, the beneficiary gets a fixed amount.
Whole Life Insurance Plan: In this, you get lifelong protection cover. If the person buying this plan dies at the age of 99, the nominee is still entitled to claim. The premium of this policy is very high.
ULIP: This includes both protection and investment. The portion invested in ULIPs is invested in bonds and stocks and you get units like in mutual funds, so the returns are linked to market volatility, so there is no guarantee of returns.
Moneyback Insurance Policy: In case of death of the policyholder during the term of this policy combining investment and insurance, then the entire Sum Assured gets to the beneficiary. Sum Assured along with Bonus is refunded in installments during the policy term itself.
Savings cum Investment Plans: This type of life insurance category covers both traditional and unit linked plans.
Child Insurance Policy: In this, a lump sum amount is paid to the child after the death of the policyholder. All future premiums are waived off and the company continues to invest.
Endowment Policy: Under an endowment policy, the face value of the policy amount is paid on the death of the policyholder or after a specified number of years. The Sum Assured is refunded along with the bonus at the end of the specified period.
Premium : The amount you pay every year for the policy to the insurance company is called premium. The policy is canceled for non-payment of premium. You have to pay premiums for a fixed term or as a lump sum depending on the type of policy.
Rider : The top-up you buy to get maximum benefits other than the basic life insurance plan is called rider. For example, with a life insurance policy, you can add Accidental Death Benefit Rider, Permanent Disability Rider.
Death Benefit : The amount paid by the insurance company to the nominee on the death of the policyholder during the term of the policy is called death benefit.
Nominee: You can make anyone a nominee including spouse, children, parents and family members. On the death of the policyholder, the nominee is given the benefit by the insurance company.
Maturity Age: This is the maximum age at which the policy terminates. If a 25-year-old policyholder has availed life insurance with a maturity age of 65 years, then the maximum policy term will be for the next 40 years.
Surrender Value : In case the policy is discontinued before the age of maturity, the insurance company can pay the amount to the policyholder, this is called the surrender value.
Free-look period: The policyholder gets a free-look-out period at the time of purchasing the insurance, during which it can be returned if you do not like the terms, benefits or conditions of the policy. The policyholder can take a refund within 15 days of receiving the policy document.