- Term insurance is a long-term plan.
- Term insurance provides for financial safety net that ensures the well-being of the family of the insured in the event of untimely demise of the insured during the Term Period.
- If you are the sole breadwinner of your family, Term Insurance becomes all the more essential for you. The idea is to provide financial support to your family for meeting their day to day as well as long-term expenses such as your child’s education or marriage.
- You should have at least one Term Insurance as it provides higher death benefit for lesser premium amount paid. This is in comparison to Life Insurance benefits.
- It can have the following addons:
- Cover against critical illness.
- Cover for your spouse as well (but note that the policy expires when one of them dies)
- Extra payout in case of accidental death
- In term insurance, if the insured stops paying the premium on time, the policy lapses and thus the benefits of the policy gets terminated.
- Life insurance is a long-term plan.
- Life insurance can offer both Survival and Death benefits at the end of the insurance term.
- Life insurance policy offers both death and maturity benefit to the insured.
- If you are the sole breadwinner of your family, Life Insurance becomes all the more essential for you. The idea is to provide financial support to your family for meeting their day to day as well as long-term expenses such as your child’s education or marriage.
- You should have at least one Life Insurance as it provides both survival and death benefit for a relatively higher premium amount paid, to balance your risks. This is in comparison to Term Insurance benefits.
- Health Insurance is a long-term plan.
- Health insurance comes with no Survival or Death benefit. It takes care of all your medical expenses in case your health deteriorates and you need treatments. These cover the costs of medicines, medical tests, hospitalization, surgeries, and other medical treatments.
- Policies other than term life insurance, are called endowment policies.
- These can in turn be divided into:
- non-participating, and
- Non-Linked Participating Endowment Plan
- It lets you participate in the profits of the life insurance company.
- The survival payment or benefit is linked to the profits of the life insurance company.
- Unit Linked Life Insurance Policy (ULIP)
- The maturity amount is more dependent on your investment choices rather than the profits of the life insurance company.
- Your policy is invested in funds and divided into ‘units’ similar to those of a mutual fund. You typically get a lot of freedom to choose the type of fund your money will be invested in.
- Non-Participating Non-Linked Endowment Plan
- It defines exactly how much your family will get on your death and how much you will get on the maturity of the policy.