Life insurance is the wisest investment for anybody who looks ahead to a secured future. The biggest life insurance benefit is that it secures the future of the entire family of the life insurance policyholder. This safety net is necessary to safeguard the future needs of a family in case of any unforeseen circumstances that may lead to financial strain. So if you are still in a fix about life insurance investment, than do it while you are young and capable.
Since the inception of life insurance in India, various life insurance products have been launched. Each life insurance provider offers different kinds of life insurance policies for the varied requirements of the customer. Private sector insurance companies like HDFC life insurance have come up with the most diverse range of life insurance schemes that provide maximum benefits to the policyholder. Their share in the life insurance sector has grown from a mere 2% in FY03 to 29.69% in FY18. So if you are looking to insure your life and secure your future, you have unlimited options to choose from. Buying a life insurance policy while you are young benefits you in more than one way.
Life Insurance Plans- Deeper Insight on Types of Life Insurance Policies
Life insurance is a written financial contract between the insurer and the policyholder which states that the beneficiary will receive a predetermined sum of money in exchange of a fixed premium, in case he/she meets an untimely demise. Depending upon the life insurance conditions, the policyholder can also receive life insurance benefits in case of critical illness. Many different provisions are available to meet the financial needs of the beneficiary like those offered in HDFC life insurance policies.
Life Insurance Components:
Premium is the fixed amount of money paid by the life insurance holder so that the insurance cover continues. The amount is either paid in regular installments or paid at a time while buying life insurance plan. Life insurance premium is calculated based on the cost of insurance. Irregular or non-payment of premiums can lead to life insurance lapse.
Life insurance premium payment modes are varied. You can opt to pay premium installment in the nearest life insurance branch or to the respective life insurance agent. The most convenient mode is to pay the sum online through net banking or by using your credit/debit card. Such facilities are available for most popular insurance companies like HDFC life insurance premium pay.
- Death Benefit:
Life insurance death benefit is the sum stated in the contract which is payable to the life insurance nominee in case of death of the insured. As a policyholder, you can decide the death benefit amount based on the estimated requirement of your beneficiaries.
Other life insurance types also provide the option of survivor benefit in case the policyholder is alive even after the completion of the life insurance term.
The beneficiary can choose to receive the death benefits or survivor benefits as a lump sum amount or in the form of regular installments. However, to claim death benefits, the nominee will be required to fill out a claim form like HDFC life insurance death claim form which can be downloaded online or procured from the nearest branch of HDFC life insurance office.
- Life Insurance Cash Value:
For permanent or universal life insurance plans, cash value serves as the untouched reserve of money which acts as savings as well as inflation offset, along with your rising age. So if you wish to be at par with the rising cost of living, investing in plans like HDFC life insurance plans is an excellent idea.
Types of Life Insurance:
There are two basic life insurance types:
- Whole Life or Permanent Life Insurance:
This kind of life insurance plan covers the entire lifetime of the insured. This means that you will have to pay premiums till you are alive.
- Term Life Insurance:
This kind of insurance policy provides life cover only for a fixed term. They usually come with no savings or survival benefits.
Based on the different types of objectives and returns, life insurance plans can be classified as follows.
- Term Insurance Plans:
- Term plan is the most basic and affordable life insurance.
- The objective of this plan like HDFC life insurance term plan is to provide life cover for a fixed tenure that covers death, disability and disease. In case of death of the policyholder within the term, the nominee is eligible for the death benefit.
- This plan doesn’t provide any savings or annuity upon surviving the full term of insurance.
- Endowment Plans:
- Endowment life insurance plan is a dual benefit plan.
- The objective of such a plan is to ensure payouts in both situations- the survival and death of the insured.
- Since the maturity benefit is higher, the policyholder has to pay a higher premium as compared to term plans.
- Unit Linked Insurance Plans:
- This variant of endowment life insurance aims to provide insurance as well as higher maturity benefit by investing premiums for growth.
- The policyholder may choose the preferred type of investment portfolio (stock or debt market) offered by the insurer, like HDFC life insurance ULIP plans.
- Whole Life Plan:
- Whole life insurance policies provide cover for the entire lifetime of the insured.
- The policyholder pays premiums till his/her death, after which the death benefit is payable to the beneficiary.
- Money Back Policy:
- As the name suggests, it an investment cum insurance plan that provides periodic payments of benefit over the term of the policy.
- Upon the death of the insured within the policy term, full sum assured is paid to the beneficiary. If the insured survives plan term, remaining sum assured is paid.
There are several combinations of insurance plans available to suit your needs. You can use many of the online premium calculators like HDFC standard life insurance premium calculator available for free and check the minimum insurance required to provide you with the right coverage.