Life insurance protects against the uncertainties of life, including the inevitable event of death, which can cause significant emotional and financial loss.
What is a Life Insurance Policy?
We broadly understood the concept of life insurance above. Now let us delve deeper into what a life insurance policy means for an individual. A life insurance policy is essentially a legal contract signed between the insurance company or insurer and the person who buys the policy or the insured. The insurer promises to cover the financial loss in the event of the premature death of the insured at any point in time.
Top 5 Features of Life Insurance
Let us look at the key features of a life insurance policy below:
In life insurance, the policyholder and insured can be the same or different. When buying insurance on one's life, they are both the policyholder and the insured. When purchasing insurance for their spouse or dependent child(ren), they become the policyholder, and the spouse/child is the insured.
The person covered by the life insurance policy is called the life insured.
Life insurance policies have specific coverage periods and levels of risk. The insured can choose the preferred duration and coverage.
The policyholder pays the premium to the insurer to receive policy benefits.
Insurance companies provide various types of life insurance policies, each with its own distinct benefits. Below, we explore the different plans available.
Types of Life Insurance Policies
Let us look at them in detail here:
Savings & Investment Policy
A means to channelise your life savings towards achieving a specific goal in the future
Whole Life Insurance Policy
Risk coverage for the life of the insured throughout their entire lifetime or up to 99 years old
Group Insurance Policy
Risk coverage for the employees of an organisation and corporate firms
Unit Linked Insurance Plan or ULIP
Investment plan allowing a combination of investments in a variety of debt and equity funds and partial withdrawals with a 5-year lock-in period
Child Insurance Policy
Useful for financing the higher education of your child and/or marriage expenses along with life cover