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Life Insurance 1301 views April 25, 2020
Life Insurance is a vast subject and often covers a wide spectrum of coverage options. The various variants of life insurance make it a comprehensive product as each of the variants have their own set of features and benefits. All these variants are capable to satisfy the insurance, safety and security needs of its customers. the three variants of life insurance policies are:
Whole life insurance as the name suggests is an insurance policy that offers insurance coverage for the entire life. The benefit paid under this plan is the death benefit along with a savings component. A whole life insurance policy is generally known as permanent or traditional life insurance policies. Now let us understand the features and benefits of the other variants of the life insurance policy.
Table of Contents
Definition: A term life insurance policy, also known as a Pure Term plan, is an insurance policy designed to offer death benefit in the event of loss of life. Under Term Life insurance plans, no other benefit other than death benefit is payable. The benefit i.e. the death benefit is usually paid to the nominee in the event of the death of the life insured.
Characteristics:
The biggest benefit of buying term life insurance is to secure the financial future of your loved ones in your absence. Term insurance is the best way to compensate for the loss the income in the event of the death of the bread-earner. Similarly, it is the best tool for creating a corpus of money which can be utilized by loved ones. thus, a term life insurance plan is your tool to plan financial protection for your family.
Definition: Return of Premium is a type of life insurance plan wherein a certain portion or all of the premium amount (paid during the policy term) is returned back to the life insured. This feature makes the premium amount of this insurance plan to be usually higher as compared to the term life insurance plan.
Characteristics:
The basic premise of the return of premium policy is that the life insured has higher chances to outlive the policy tenure so for this reason return of premium policy is the best tool to invest. However, the option of choosing the return of premium policy solely depends on the individual’s financial situation and insurance goals. Receiving a good amount of corpus at the end of the policy tenure can be treated as a nice retirement corpus.
Choosing the type of insurance policy solely depends on one’s financial situation and future financial needs. However, it is recommended to have a life insurance policy as it guarantees financial protection to your family irrespective of whether you choose a return of premium policy or a term life insurance.