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Life insurance is a financial product in which the insurer pays out an accumulated cash amount in case the insured dies during the term or the policy is matured.
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What Is Life Insurance? Life insurance is a financial product in which the insurer pays out an accumulated cash amount in case the insured dies during the term or the policy is matured.
Why Should You have a Life Insurance Policy? Benefits of having a life insurance plan: Protection: Life insurance policies protect the individuals and families against the unfortunate events of life and provide a financial assistance when they need it the most. Money When You Need: Insured can borrow against their future benefits and invest money in the stock market or take care of other expenses. Tax Relief: Insured can also get relief on their taxable income if they have invested in life insurance policies.
Types of Life Insurance Life Insurance offers a range of policies including: • Term Life • Return of Premium (ROP) Term Life • Term Universal Life • Whole Life • Universal Life
These are the insurance policies offered for a limited period that may range from 5 years to 30 years. In case the insured dies within the policy term, the beneficiary will receive a lump sum amount to take care of outstanding debts and other essential expenses. Term Life Insurance Types of Term Life Insurance Generally, there are two types of term life insurance policies available: Level Term Insurance: Under a level term insurance, the premium is fixed for the entire policy term. Decreasing Term insurance: Here, the premium decreases throughout the term and ultimately becomes zero.
Additional Features in Term Life Insurance Some insurers also provide additional features or benefits under a cheap term life insurance that include: Accelerated Death Benefit: Insured can receive a partial amount of their term life insurance early, in case they get diagnosed with a terminal disease. This amount can be used to take care of medical treatment, surgery, hospice services and other essential expenses. Conversion Benefit: Under this feature, insured can convert their term life insurance into a permanent insurance plan from the same insurer. This saves the insured from re-application and going through the medical examination once again.
ROP term life insurance is derived from the basic term life insurance plan and offers a unique feature. Under this plan, the insured can receive 100% amount of their premiums back if they survive the whole policy term (max up to 30 years). Return of Premium (ROP) Term Life Term Universal Life These plans are much like standard term life which remain in effect for a set period and the premiums are level throughout the policy. Along with the accumulated cash value, these policies provide more options to the extent the plan for a longer period.
As it’s clear by name, whole life insurance policies don’t have a set term and provide protection till the insured lives. These policies provide an accumulated cash value and refund the excess premium from the insurer’s divisible surplus. Whole Life Insurance Universal Life Insurance Like the whole life insurance, universal life insurance policies provide a permanent protection to the insured. Moreover, these policies come with the features as cash value accumulation, policy loans, varying policy premiums and varying death benefit.
Insured or their beneficiary can make a claim in the following three ways: Death Claim: When the insured dies within the policy term. Maturity Claim: When the policy gets matured. Survival Benefits: When the insured outlives a period or whole policy term. Policy Claim Death Claim Death claims are made by the beneficiaries to receive an accumulated cash value when the insured dies within the policy term. The beneficiaries need to present the original policy bond, death certificate of the insured and prove their relationship with the insured.
Under this condition, the insured makes a claim when the policy term is completed. The insured needs to submit the policy document and discharge and a post-dated cheque is sent to their address. Maturity Claim Survival Benefits Some insurers provide survival benefits for surviving a period or whole policy term. Usually, if the insured and enrolled for a 20-year policy, they will receive 1/4th of the benefits after 5 years, another 1/4th of the benefits after 10 years and rest amount after completion of the whole policy term.
Permanent Disability Benefit In case the insured becomes permanently disabled, the insurer pays out an additional amount equal to the sum assured in monthly installments up to 10 years. Moreover, the future amount of insured in waived off. Exclusions in Accident Benefits Insurance policies have excluded some specific incidents from their accidents benefits list that are: • Suicide, attempt to suicide or intentionally caused injury • War, Civil War, Riots, Revolution or any war-like operation • Criminal or unlawful act • Influence of drug or restricted medicines • Injuries due to racing vehicles
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