What are the different types of Life Insurance Policies

What are the different types of Life Insurance Policies

Life assurance contracts available are many and the basis of all these
policies can be found under the following headings:

Term Insurance

This is the simplest and oldest form of assurance and provides for
payment of the sum assured on death, provided death occurs within a
specified term. Should the life assured survive to the end of the term then
the cover ceases and no money is payable. This is a very cheap form of
cover and suitable for a young married man who wants to provide a
reasonable sum for his wife in the event of his death. It can also be used
for a variety of specific purposes.such as business journeys.

Whole Life Insurance

The chosen sum assured is payable on the death of the assured
whenever it occurs. Premiums are payable throughout the life of the
assured or until retirement of the assured. Although premiums may cease
at, say, age sixty the policy is still in force and should the person die at age
seventy-five the policy would provide the benefits for his widow or family.

Endowment Insurance
What are the different types of Life Insurance Policies?

The chosen sum assured is payable at the end of a given term of
years or on earlier death. These contracts are taken out as savings plans
for the future with the added attraction of life cover being included.
Endowment contracts are always popular because each proposer
earnestly hopes that he/she will live to the end of the term and spend the
proceeds himself/herself.

Annuities

When a person has a reasonably large sum of money and wants to
provide an income for himself after he retires or at some other time he
can approach a life assurance company and purchase an annuity. The
annuity may start, at once, when it is called an immediate annuity, or
may start at some date in the future (a deferred annuity). Regardless of
when it starts, it can take various forms. It may provide an annuity for the
life of the person, the annuitant, or it may be payable irrespective of
death for a certain period, as in the case of the “annuity certain”. The
guaranteed annuity is similar in that it provides the annuity for a
guaranteed period and thereafter until the annuitant dies.

Pension Schemes

These schemes are designed to provide an income at retirement. So
far as insurers are concerned, they may be asked to arrange a scheme,
rather than a firm doing all the work itself. This involves collecting the
premiums, investing them and paying pensions to retired work people.
Many schemes on endowment policies with a group life insurance cover
to provide benefits, should the death of a member occur before
retirement age, but there are different ways in which this can be done.

What are the different types of Life Insurance Policies?

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