What Should You Consider When Buying an Insurance Policy
Getting insurance will be helpful in covering your financial needs as and when you need them. These days, there are various types of insurance plans as per the requirements of the customer.
Hence, you need to choose a plan that you really need.
Owning a life insurance policy is a job in and of itself. It’s not a simple purchase.
Make sure you have a fundamental grasp of life insurance as a first step. The benefits offered by various life insurance plans vary.
Insurance firms provide add-ons to standard life insurance coverage to accommodate a variety of customer needs.
The fundamental policies’ supplements are referred to as riders. The riders cover critical conditions like a heart attack, accidental death, and income assistance for disabled people.
If you choose the wrong plan, you will suffer a loss in premium as well. Before choosing an insurance plan, you must go through the terms and conditions of the policy thoroughly so that you do not face any problems later.
1) What is an Annuity?
An annuity is a type of life insurance policy in which the insurance company pays an income stream, usually to the individual, until death in exchange for payments that have almost been made.
In the event of death, no payment is required for the estate, although many annuities include a provision for payment of income to a spouse.
Immediate annuities provide income from the date the policy is taken, and deferred annuities provide income at a future date.
2) What is Endowment Policy?
It is a type of savings insurance policy that helps in the accumulation of wealth and, at the same time, provides insurance protection.
In cases where the client dies before maturity, the sum assured is paid. On maturity, the accumulated amount is payable. Endowment policies, whether participating or non-participating, are numerous and are long-term contracts.
3) Participation and Non-participation in Life Insurance
Non-participating or non-profit policies are policies in which the policyholder is not entitled to share in the profits and surplus of the company. meaning no bonus is paid to the policyholder.
Policies and unit-linked insurance contracts, like term insurance or health insurance, are covered under without-profits policies or non-participating policies.
Participation is a life insurance policy where the policyholder is entitled to the profits of the company in the form of a bonus. Such policies have a higher premium than non-participating policies.
4) What is a Pension Product?
A pension policy that is specially designed keeping in mind the retirement benefits so that people can get their due benefits later. Pension products can be unit-linked or non-linked.
5) What Are Insurance Riders?
Insurance riders are an additional option that can be availed of by paying an additional premium. These riders provide additional coverage and can combine linked and non-linked life insurance policies.
6) Unit-Linked Life Insurance Products (ULIPs)
Unit-linked life insurance products are different from traditional insurance products and are subject to the risk factor premium paid in ULIPs, which is the underlying risk exposure to the capital market and NAV of the unit.
7) Whole Life Insurance
This type of insurance policy provides whole-life coverage. Premiums should be paid only for life. The sum assured is paid as and when death occurs. Generally, used for estate planning purposes.
