Life insurance is a contract between the insurer and the policyholder. The insurance company will pay the designated sum for the money paid by the policyholder. The payment will be made upon the death of the person or other conditions as mentioned in the policy document. You should understand important facts about the life insurance policy so that you will settle for one of the best life insurance plans without any issues. There are many interesting life insurance facts which will be an eye-opener for a novice as well as the experienced customer.
Insurance requirements
If you are the sole breadwinner of your family, you should go for a comprehensive life insurance policy so that the beneficiary (spouse or children) will get a lump sum amount. The financial void will be filled by the insurance policy. Hence, you should buy an appropriate insurance policy as per your family needs.
Types of policies
There are two types of insurance policies. You can buy a term policy or money-back policy as per your convenience.
Term policy
If you go for a term plan, the policy benefit will end by the end of the term. It is the cheapest form of insurance. If there is a risk to your life, the 'sum assured' will be paid to the beneficiary. The policy will be closed after returning the proceeds.
Money-back policy
The money-back policy will let you enjoy financial benefits even though you do not go through the event. You will get a certain lump sum amount based on the premium and bonus announced by the insurance company on annual basis. You will also be able to get money at regular intervals as per the terms and conditions stipulated in the insurance policy.
Premium
The amount that you pay towards the coverage of risk is called 'premium'. The premium can be paid monthly, quarterly, semi-annually or annually as per your convenience.
The premium amount will be low when you sign up for the insurance policy at an early age. As you grow old, the risk factors will increase and there will be an additional burden on the insurance company. Hence, the insurance company will charge a higher premium for older people.
The duration of the policy
The duration of the policy will be 15 years or more as per your needs. It can be chosen as per the policy entry age. If you buy an insurance policy at the age of 25, you can go for 20 years term so that the coverage will be up to 20 years. The policy benefits will be paid at regular intervals or at the end of the term as per the policy wordings.
ULIP
In order to deliver high yield, you can consider ULIP (Unit Linked Insurance Plans). The insurance company will invest your money in the stock market by buying shares in profit-making companies. The risk will be borne by the customer. As long as the market fares well, you will make good gains through the ULIP. You will get life cover as well as financial gains with the insurance plan.
Policy coverage
You should choose the policy coverage as per your financial needs. You should be able to pay the insurance premium without financial burden. Hence, the premium should be in proportion to your earnings. If the premium is very high, you will find it difficult to manage your monthly expenses. On the other hand, you will not get sufficient financial benefits when you go for a low premium. Hence, a fine balance should be done by considering your monthly income as well as the needs of your family.
Purpose of the insurance policy
The insurance policy will deliver income protection. It should not be considered as a pure financial investment. The product is designed to cover the risk to your life. There are various risk factors that arise due to health, accident and occupation.
The insurance policy will also help you pay your loans from financial institutions in the event of your death. As there are various kinds of life insurance products in the market, you should go through the interesting life insurance factsto settle for the best life insurance policy.
Get quotes
You should get life insurance quotes from two or more insurance companies so that your needs will be aware of various features. A customized policy can be chosen by including useful features and avoiding unnecessary features.
When you study insurance quotes, you will save a lot of money and it is possible to buy the most appropriate insurance policy.
A final word
The life insurance company should offer the best service and support so that the very purpose of the life insurance policy will be fulfilled. You should buy an insurance product from a reputed company and should go for the appropriate policy as per your earnings and age.
