Know different type of life insurance policies and its tax benefit

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Know different type of life insurance policies
and its tax benefit
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• Life Insurance, in all its manifestations, seems
  a technical concept to many of us and thus we
  choose to overlook the nitty - grittiness of an
  insurance plan even when we are investing in the
  same. Call it the lack of awareness or the
  technical jargon used in the policy details, an
  average customer only concerns himself with the
  benefits he would receive and the premium he is
  supposed to pay. Is the sentiment ringing any
  bells in your psyche? Arent you too suffering
  from the same ignorance and are more interested
  in the plan benefits than the plan itself?

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Meaning of Life Insurance

• A life insurance policy is a contract between the
  insurance company and the person buying the plan
  called the proposer. The company undertakes to
  cover the death risk of the proposer himself (who
  becomes the person insured and policyholder) or
  another member (person insured) for whom the
  proposer is buying the plan and paying the
  premium (the proposer then becomes the
  policyholder). In exchange for the risk
  undertaken by the company, the policyholder
  promises to pay a specified amount (premium) to
  the company. This amount depends on the insureds
  age and the Sum Assured (the amount of coverage).

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Features of Life Insurance

• Sum Assured This is the amount of coverage
  under the insurance plan. This would be the
  amount which would be payable on death of the
  insured. The choice of the sum assured rests with
  the policyholder and the company decides whether
  to accept the chosen Sum Assured depending on the
  insureds risk profile.
• Tenure Also known as the plan term, this is the
  period for which the company undertakes the risk
  on the insureds life. The choice of the tenure
  too lies with the proposer. He can choose any
  term suiting his financial requirements.

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• Premium Premiums are payable by the
  policyholder and are always paid in advance. The
  rate of premium is calculated based on the age of
  the insured, the level of Sum Assured chosen,
  gender of the insured, the premium paying
  frequency and the chosen plan term.
• Premium paying frequency Though premiums are
  usually calculated on an annual basis, the
  policyholder might choose to pay premiums in
  half-yearly, quarterly or monthly modes. Though
  the half-yearly premium is usually half of the
  calculated annual premium, the quarterly and
  monthly premiums are usually higher than the
  proportionate annual premiums. Furthermore, the
  chosen frequency too affects the rate of premium.

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• Entry and exit age Every insurance plan has a
  specified entry and exit age. The entry age has a
  minimum and a maximum limit and specifies the
  minimum and maximum age criteria for availing the
  policy. Exit age also has a minimum and a maximum
  limit and specifies the maximum age beyond which
  the policy couldnt continue.
• Benefits Every life insurance policies plan has
  a compulsory death benefit (except Immediate
  Annuity Plans). Other than a pure term insurance
  plan, every life insurance plan has a maturity
  benefit too. While the death benefit is payable
  on the death of the life insured, the maturity
  benefit is payable if the chosen plan term
  completes and the insured is alive on such
  completion. There is also a concept of survival
  benefits which accrue under a Money-Back Plan.

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• Types of Life Insurance A life insurance plan
  can either be a traditional insurance plan which
  promises guaranteed benefits or a Unit Linked
  plan where the benefits paid are non-guaranteed
  and linked to the market. More knowledge of the
  types of insurance plans would become clear when
  we discuss the various types of a life insurance
  policy available in the market.
• Bonus Traditional life insurance plans might be
  issued as participating plans which earn bonuses
  or non-participating plans where bonuses are not
  declared. Bonus is nothing but a part of the
  profits earned by the insurance company by
  investing the accumulated premiums. Since the
  returns are generated on the premiums paid by
  policyholders, bonus is paid back to them.

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Source https//www.advisorkhoj.com/articles/Life-
Insurance/Know-different-type-of-life-insurance-po
licies-and-its-tax-benefits