Q.5 Discuss various kinds of life insurance?
Ans: There are many types of life Insurance policies* The whole life policy and the endowment policy are the two most common types among them.
Under this policy, the insured undertakes to pay the assured a specified amount on the attainment of a Particular age or on his death, whichever is earlier. Endowment policy may be taken for varying period of time, say 20 years, 25 years and soon. If the assured has taken a policy for 20 years, and remains alive after the expiry of 20 year, he gets the insured amount. But if he dies before that period, his legal heirs or nominees receive the amount from that period, his legal heirs or nominees received the amount from the insurer. Endowment policies are most popular because they serve the dual purpose of family and old age pension endowment policies may also taken with profit or without profits.
UN-PROFITABLE POLIC Y
According to this policy the insured amount will be paid but without profit.
Under this policy insurance company also pays profit with the insured amount. Its premium is generally higher.
WHOLE LIFE INSURANCE
Under this policy, in the beginning a whole life policy is issued but after the expiry of a certain period, the issued is given an option to convert the policy in to an endowment policy- If the option is not exercised, the policy continues to be whole life policy.
It is issued for a fixed period. If the assured person dies within this fixed period, Insurance Company will pay the face value of the policy to the heirs. On the other hand if insured person survives in this period he gets nothing.
GROUP LIFE INSURANCE
This policy is introduced for giving an insurance coverage to the group of employees working in office or factory. These are issued without medical examination.
JOINT LIFE POLICY
A joint life policy involves the insurance of two are more lives simultaneously. If any one of person assured dies, the policy money becomes payable to the survivors. Such policies are usually taken upon the lives of partners in a firm or on the lives of husband and wife.
FAMILY PROTECTION POLICY
This policy is very useful for the family members. It is issued for a specific period. If the insured person dies during this period, insurance company pays a specified amount to heirs* tip to a specified period monthly, quarterly or yearly. If the insured survives then he will get the insured amount.
CHILDREN’S EDUCATIONAL POLICY
Such policies are taken to provide for the higher education or marriage of children premium is paid a specified period of time and the insurance company agrees to pay a fined amount when the children attain a certain age.
INSURANCE OF LAST SURVIVOR
This policy is obtained by two or more than two persons. The insured amount is paid when all the insured persons die. If one dies before the other then insured amount will not be paid,
Under an annually policy, the policy amount is payable by monthly, quarterly half yearly or yearly installments and not in one lump sum. The insured in this case is asked to deposit a lump sum of money at the beginning of the policy and the periodic life Insurance installments by the Insurer will continue his death or for a specified period, as agreed. This type of policy is beneficial to those who want to have a regular Income for themselves or their dependents after a certain age.
Some people obtain this policy to save themselves from the unexpected accidents. Insurance company pays the insured amount in case of accident death. In case of injur)’ and disability insured person is paid according the condition of contract.
The policy meets several insurance need of a person such as provision for old age. Income for his family provision for education of children, marriage or the star-in-life of the children etc. in case of the death of the assured, the insurer pays a monthly regular installment to his family during the unexpired term of the policy and also pays some fined amount at the end of the assured period. If on maturity, the assured is alive he may get the sum assured in cash or in Installments by way of pension or an increased sum on death.
CONVERTIBLE WHOLE LIFE POLICY
Such a policy provides minimum insurance of minimum cost and also offers flexible contract, which can be altered at the end of 5 year from the commencement of the policy. Then, the contract may, at the option of the assured by converted from a whole life policy to an endowment policy.