Types Of Life Insurance Policies For Individuals
If you have dependents, life insurance is required. That just about sums it all so as to why people opt for life insurance as a must. There are agents out there on the lookout for someone who would take up their offer. It is up to the insurer to decide which kind of insurance is best suited for him. Since the life insurance policy in itself has multiple plans to offer, taking a decision is not easy, but not hard either. Understand the various plans and analyze which one would provide the maximum benefits in the long run.
1) Whole Life Assurance
This kind of policy remains in force for the insurer's life till the end. The insurer needs to pay for the policy in the form of premiums which are deposited with the firm. Since the policy is a whole life insurance, there is no need to renew the policy after periodic time frames. The dependents that would get the surrendered amount after the demise need to be named at the time of the policy being purchased.
Another flavor of plan is when the insurer chooses to pay the deposit amount of the policy not in premiums but in lump sum. The charges are hefty and are generally done by people as an investment measure. The only catch is that owner would never see the deposited money in his lifetime as the amount would be forfeited in case the owner wishes to terminate it. People who opt for whole life insurance enjoy the benefit of security without any tension.
2) Level Term Assurance.
As opposed to the whole life insurance, the level term insurance policy comes with a validity period. If the insurer survives the policy period, the deposited money is surrendered to him with which, he can choose to renew the policy or drop it. The amount of each premium increases with subsequent renewals.
The period of validity can be chosen by the owner which is generally from a decade or more. In some cases, people prefer to go for annual plans which cover the individual for only a year. The premiums to be paid are annual in nature and in case of the death, similar to the level terms insurance, the insuring company pays the amount of the policy to the dependents. It is up to the policy holder to decide whether the sum has to be surrendered in installments or in lump sum.
3) Decreasing Term Insurance
Under the decreasing term life insurance, the value of the policy decreases every passing year. This results in the decrease in the amount of premium that needs to be paid. The people who opt for it are those who want their debts to be paid for by the end of their lives. if the debts have an interest attached to them, which increases with the passage of time, purchasing this scheme is not feasible. The decreasing term insurance plan can also be brought by those who are nearing their retirement and would not be able to pay the whole premium amount later due to decrease in income.