Life insurance is a unique financial product that can achieve various financial objectives. It can be utilized as a financial cover for your beloved family and dependents, provide a second source of income during retirement, and build a corpus for the child’s future higher education and marriage. Also, life insurance policies can be used as a tax-efficient legacy tool to pass on wealth from one generation to the next.
Let us find out the different types of life insurance and understand their specific features.
Features of Life Insurance Plans
Below are some features of life insurance:
Premium Payment
Premium payment is a crucial aspect of life insurance. The premium is the cost of purchasing a life insurance plan. It differs based on the sum assured, tenure, riders and other aspects of your plan. There are multiple ways to pay the premium, such as monthly, quarterly or annual payments. Life insurance plans offer these options to cater to the diverse preferences of policyholders.
Maturity Benefits
Maturity benefits are given to you at the completion of the policy term if you survive the tenure. Life insurance plans have a maturity date when you receive these benefits in a lump sum. The maturity benefit helps you cater to future goals and plan ahead. These benefits can differ as per the policy you have, such as endowment plans, Unit-Linked Insurance Plans (ULIPs) and others.
Sum Assured
The sum assured is one of the key features of life insurance. The sum assured is the guaranteed amount that is given to the plan’s nominee in case of an unfortunate event during the policy term. This sum helps the policyholder’s family cover their financial needs.
Policy Term
The policy term refers to the duration for which the life insurance policy is active and provides coverage. It is the period during which the plan’s nominee is eligible to receive the insurance payout. It is important to select a suitable policy term that aligns with your long-term financial objectives.
Claim settlement
Another essential feature of insurance that you must know about is the claim settlement. Claim settlement is the process where the insurer gives the policy benefits to the beneficiary upon the untimely absence of the policyholder. A smooth and prompt claim settlement process is vital to ensure financial support for the beneficiaries in a timely manner.
Riders
Riders are add-on benefits that can be added to a life insurance plan at an additional cost. These are optional covers that can be used to enhance a life insurance plan’s coverage. Some common examples of riders include a terminal illness rider, critical illness cover, permanent disability cover and comprehensive accidental benefit among the other rider options.
Nominee
The nominee is the person who receives the sum assured of the life insurance plan. Policyholders may nominate their spouse or children as nominees for a plan. Life insurance policies usually offer option to update the nominee as per your evolving personal relationships.
What are the Benefits of Buying a Life Insurance Policy?
Below are some benefits of buying a life insurance policy:
Financial Security
Financial security is one of the primary advantages of purchasing a life insurance plan. In the event of the policyholder’s unfortunate absence, the life insurance plan offers a guaranteed payout to ensure the family’s financial security. This offers peace of mind and financial stability during challenging times.
Investment Component
Many life insurance policies like ULIPs include an investment component that allows you to invest in different funds of your choice. This can be a good way to build wealth with market-linked assets and cater to various financial goals.
Add-on Benefits & Riders
Riders are one of the most versatile characteristics of life insurance. Life insurance policies can be customised with add-on benefits. Riders, such as terminal and critical illness coverage, permanent disability benefits or comprehensive accidental benefit covers can’ help you address specific needs and circumstances.
Stress-free Retirement
A life insurance policy can play a crucial role in offering you a stress-free retirement. Adding life insurance to your investment portfolio can help you accumulate wealth over the years while simultaneously securing your loved ones financially. Life insurance can provide you with a comfortable and worry-free retirement with long-term financial stability.
Conclusion
Life insurance is a multifaceted financial tool. With several beneficial features of life insurance, ranging from multiple premium payments to riders and quick claim settlements, you can secure your loved ones and enjoy peace of mind.
