Before beginning anything else, it is essential for you to know what Life insurance is and why you must have the best life insurance plans for family. To simplify it, life insurance or a life insurance policy is an agreement between the policyholder and the insurance provider. According to the agreement, the policyholder will pay a certain amount of money as a premium.
Before we get into the best life insurance plans for family, you should know some of the terms related to life insurance. These will help you in understanding what you are getting into while getting insurance.
The policy is a documented contract that acts as proof of the agreement between the two parties. This contract is issued to both the company and the person getting insured. This document contains all the terms and conditions of the insurance, for instance, the tenure, amount, premium, etc.
To simplify, the person who is insured against the risks is known as Life Assured. So, If you are getting life insurance for yourself, then you are life assured. Or if you are getting life insurance for your mother, then your mother is life assured. If anything happens to the life assured, for example, death, the amount of insurance will be given to the beneficiary/nominee.
A policyholder is a person who buys the insurance plan and pays the premium. Do not confuse the policyholder with life assured because it is not necessary that a policyholder is life assured. For instance, you bought an insurance policy for your 8-year-old child and you are paying the premium, in this case, you are the policyholder and your child is life
A person who is nominated by the policyholder is called a nominee, also known as the beneficiary. The beneficiary will receive the amount of insurance and other benefits in case of uncertainties such as the demise of the life assured. The policyholder has to name the nominee when the policy is bought. In normal cases, the immediate relative of the policyholder, such as spouse, parent, or children is declared as a nominee, as they are directly dependent on finances. In case the policyholder and life assured are different, the policyholder can name himself/herself as the nominee.
The policy term, also known as the policy tenure, is the period during which the life assured will be provided coverage. The policy term can differ depending on what type of insurance plan it is and the terms and conditions in the agreement between the insured and insurer.
Premium is the amount that the policyholder pays in order to keep the insurance plan active. The amount of policy depends on the insurance plan, terms and conditions, age of the life assured, etc.
If the policyholder fails to pay the agreed amount before the due date or under the grace period, the policy will automatically lapse.
A premium term is a duration throughout which the policyholder will pay a certain amount of premium. Premium term should not be confused with the policy term as they are different and bother the terms can have different duration. For instance, if the policy term is 30 years and the premium term is 10 years, i.e., the policyholder has to pay the premium for 10 years, but the life assured has the coverage for 30 years.
Sum assured is the guaranteed amount that the nominee or the beneficiary will get during the time of life assured’s demise. This amount is decided by the policyholder at the time of buying the insurance plan and policy. The amount is decided according to the financial losses that one might face during the demise of the life assured.
Nominees or the beneficiary will receive this amount at the time of the death of the life assured during the policy term. However this is different from the sum assured, so do not get confused. Due to the involvement of the rider benefits, the amount of death benefit could be equal to or higher than the sum assured.
These are the additional basic benefits under the policy that the nominee gets. Although these benefits are optional, they add to the coverage in order to protect your family from the risks of uncertain events. Rider Benefits include accidental deaths rider, critical illness rider, waiver of premium rider, etc.
It is the amount that is paid to the policyholder when the tenure of the policy is completed and the life assured is alive and well.
As mentioned earlier, if the policyholder fails to pay the amount even after the grace period that is called the lapsed policy. You can get the policy revived, however, that depends on the insurance company and their terms and conditions. A lot of companies allow the policy to be revived but with an interest or the payment of an outstanding premium.
The grace period is an extended period after the due date within which the policyholder can pay the premium. If the policyholder pays the premium within the grace period, his/her insurance plan will be active otherwise the policy will lapse.
When a person fails to pay the premium even in the grace period, the policy automatically gets lapsed. Now, after the grace period ends, there is a certain time period in which you can get your policy revived, this time period is called a revival period. Again, there are certain terms and conditions regarding the reactivation of the policy which depends on the insurer or the insurance company.
The free-look period is like a trial period for the policyholder regarding the insurance plan and policy. If at all, the policyholder is not satisfied with the insurance plan he/she just bought, they can return it within a certain amount of time.
After the demise of the life assured, the beneficiary needs to file a claim. This process is called the Claim process and with that, the beneficiary will receive the death benefits.
There are certain situations that are not covered in your insurance plan. If any of those situations occur, then life assured (if alive) or nominee (in case of the life assured’s death) will not receive any benefits.
These are some of the terms that are used on a regular basis in insurance companies. If you go to any of the firms, you will hear these words a lot which is why it is imperative to understand them.
Now that you are familiar with these terms, it is time to know which are the best life insurance plans for family.
There are many types of life insurance plans that insurance companies provide you with. Some of the plans give you just the insurance coverage and some plans provide you with other benefits and facilities such as a pension, survival benefits, etc. Some of the best insurance plans are for families, so lets us dive and get some more information.
A term insurance plan is the most basic plan that anyone can afford. In simple terms, the policyholder pays a premium and is insured for the specific period of the policy. At the time of buying the policy, the policyholder gets to decide the duration of the policy and also the amount that will cover him/her. In case of uncertain events, the beneficiary will receive the agreed amount at the time of buying the policy.
The duration of the policy can vary depending on the policyholder’s choice and terms and conditions agreed upon by both the parties (policyholder and insurer).
Unit linked insurance plan, also known as ULIP, is a specific type of plan that offers both insurance as well as investment. This plan provides you with long term investment opportunities and flexibility regarding the investment made.
A part of the premium paid for ULIP is used as the usual insurance coverage against any life-risks, and the remaining amount of the premium is used as a market investment, for instance, debts, market funds, equity, hybrid funds, bonds, and many more. Where in the market should the money be invested, that totally depends on the buyer and based on that decision the insurer invests the money?
Endowment plans are one of the best life insurance plans for a family because it is a blend of insurance and savings. Endowment plans are often referred to as traditional life insurance plans. Compared to other insurance plans, this plan has the lowest risk factor, however, the returns are also low.
Just like ULIP, a part of the premium paid by the policyholder is used in life coverage and the remaining amount is invested by the insurance provider. If the life assured is alive and healthy after the policy term has come to an end, the insurance company will provide a maturity benefit. Along with that, there are some endowment plans that offer specific benefits in the pre-specified period. This amount will be either paid to the life assured at the time of maturity or to the beneficiary in case of death of the life assured.
A lot of companies call these plans pension plans and other companies call them retirement plans, and some companies call them annuity plans, so do not get confused. As the name suggests pension plans are the best life insurance plans for a family because it secures your future. It is quite evident that you cannot work forever, you are going to retire at one point in time. And when you retire, you won’t be receiving a monthly salary, so retirement or pension plans ensure that you get a fixed amount of money after your retirement.
The terms and conditions of the policy depend on the insurance company or the insurer, however, the basic conditions such as the premium paid in instalments and repayment to the insured remain the same.
Once the life assured outlives the policy, the insurance company shall provide him/her with a fixed amount that was agreed at the time of buying the policy. Along with that, the life assured will receive some bonuses that come along with the policy. In case of uncertainty such as the death of the life assured, the beneficiary will immediately receive the money all at once
Money-back plans are not just limited to ensuring your life with a certain amount of money at the time of maturity. Unlike normal life insurance, these plans provide you with regular payment at certain intervals. And this is the reason why this plan is called Money-back and this payback is often referred to as survival benefit. The rest of the terms are quite similar to other coverage plans.
One of the best life insurance plans for a family one could ask for is a child plan that will secure a child’s future in the best way possible. Child plans ensure that your children do not suffer financially in case of the demise of a parent. The repayment from this plan can be used for a child’s education or wedding. Some insurers also provide you with the opportunity to invest money in the market, but that totally depends on you and your financial situation.
The benefits will be received by the life assured child when he/she turns 18. The money can be received in annual instalments or even as a lump sum amount at once. Also, in case of the sudden death of the policyholder, the insurer will pay the immediate premium. Some insurance companies also offer to waive off future premium payments.
Hello Policy will help the customers to provide them with the details about the insurance plans, its policies, terms and conditions, etc. With Hello Policy, people feel secure and they feel they can trust insurance companies now that they have developed an understanding about the insurance products. Hello Policy is growing now more than ever and customers opt for it because it maintains the balance between the insurance companies and the customers.