Types and importance of life insurance

Photo by Diomari Madulara

In today's uncertain world, life insurance has become a necessity. By definition, insurance is a legal contract between two parties (the insured and the insurer) in which one party (the insured) agrees to pay the premium and, in exchange, the other party (the insurer) pays the sum insured in case of a loss Make. In the current era, everyone should have a life insurance plan. In today's post, we will discuss what is life insurance, types, benefits and the importance of life insurance.

What is life insurance?

Life insurance is a legal agreement between the insured and the insurance company under which the insured pays the fixed premium and, in return, the insurance company provides protection for his life.

If the insured dies during the term of the policy, in this case the life insurance company pays the sum insured to the nominee set by the insured; Life insurance also provides full disability and expiration benefits.

Types of life insurance

Currently, insurance companies have launched several life insurance plans in the market. Some life insurance products cover only the case of death and in some, the policyholder also has the option to save by adding investment components.

Depending on the characteristics, there are three basic types of life insurance and the rest of the insurance products are included in these three:

Permanent life insurance

Permanent life insurance provides lifetime death coverage. The policy remains in effect until or in the event of death while the insured continues to pay the premium. Permanent life insurance collects a cash value that is added to the nominal value of your policy or paid to the nominee / beneficiary in the event of death.

The following plans are seen in Permanent Life Insurance :

  • Life insurance
  • Universal Life Insurance
  • Variable Life Insurance
  • Unit linked insurance plan

Endowment Life Insurance

The endowment life insurance policy is suitable for all age groups. The life insurance policy pays a lump sum after expiration (usually 10, 15, 20 years) or after death.

Endowment policies do not cover insured life and premiums are higher in endowment policies than permanent life insurance policies.

If the policyholder does not die during the policy period, he will get the sum insured along with the benefit; Otherwise, if he / she does not survive, the candidate or beneficiary receives the sum insured along with the benefits established in the policy.

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