Types Of Life Insurance
1. Traditional plans: a.Endowment plans-They are combination of Investment and Risk coverage, commonly used by people to invest in various L.I.C plans.A fixed premium is paid by the investor over a fixed tenure generally known as P.P.T(Premium paying term) and maturity at fixed time known as term of the Plan.Every endowment plan comes with a Risk cover of the choice and income parity of the customer, L.I.C gives Bonus out of its profits every year and terminal bonus at the end of the term so that the clients gets a good corpus at maturity, again it depends on what have u saved over what period, as a thumb rule higher premium and higher term fetches you a handsome corpus and vice versa, some other advantages include-Risk cover in case of death(Accidental/Natural),Disability etc.In normal scenario client saves on tax under 80C for the premium paid every year, also at maturity the corpus is tax free under 10(10)D.Moreover you can take loans againt your policy at a nominal rate of interest.Some of the types of endowment plans-Child Plans, Money Back Plans,Pension Plans etc.
2. United Linked Insurance Plans (U.L.I.P’S): Unit Linked insurance Plans are like mutual funds with a risk cover,like mutual funds the premium collected by the insurance company are invested in some portion in the stock market and managed by a fund manager, it is generally suited for customers with more risk apetite and who want to be invested in insurance for shorter duration 5years, rather than longer tenures of Traditional Endowment plans where premium paying term is generally longer.
3. Term Plans: One of the most Popular insurance Products in today’s time is the term Plan.Term Plan covers the Risk of overall Human Life Value depending upon one’s income or Risk cover is a multiplier of your income,generally 18-20 times gross salary and 15-16 times for self employed and Businessman of the Average ITR of last 3 years.It is suggested that a person should start taking a term plan at a young age as premium is very low and it remains constant through the term,we are also having products with life long term 100 years etc.
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