Life is Life,its a common saying,- What are the kinds in life insurance policy?
Types of permanent life insurance.Insurance policies fall into many categories. Some of the parameters for classifying them include number of years, benefits covered, premium amount and other regulations which govern the policy. Life insurance policies may also vary from company to company. However the degree of variance is minimal and none of them will be contradictory to the principles of a life insurance contract.
The two major classifications are permanent and term insurance.Term Life Insurance
Term Life Insurance is a type of insurance policy whereby the insured pays a fixed sum for a period of time. This sum remains constant. The premium charged is very nominal. The Policy holders normally survive even after its expiry unless they are affected by fatal disease or injured in an accident. This policy does not cost much. Once the policy expires the insured is also at liberty to renew the same but he will have to pay the revised rates of premium. Such a change could sometimes be too high. This is one of the drawbacks of this policy. But for this factor, it is economical and highly recommended for the salaried youth and middle men. Whole term insurance policy is another classification in term life insurance. In a whole term insurance the insured pays the fixed amount throughout his life.
This type of insurance is taken by the employer for his employees. The employer either pays the premiums from his kitty or by deducting the appropriate amount from the salary of individual employees. This policy provides lot of benefits but it cannot be relied solely to meet your insurance needs. This type of insurance is gaining significance in the developing countries.
Level term Life Insurance
This type of insurance requires you to select a particular period and pay premiums for the selected period. The policy automatically matures on the attainment of the selected period. Once you select the term say 5 10 or 15 years you cannot revoke it. This type of insurance is ideal for those people who are not able to make long term financial plans.
Permanent Life Insurance is an expensive Policy. This Policy cannot be stopped on any occasion as long as the premiums are paid regularly and you don't want to end the policy. In a permanent Life Insurance policy you pay premiums for an indefinite period irrespective of the fact they exceed the amount to be distributed to your dependents in case of death.
If the insurer decides to retain the profits made from your investment with him then you are not required to pay income tax for that amount. There is a possibility like, when you withdraw certain amount of money within the given limit you need not pay income tax for that amount. But when you deposit money in the bank you have to pay income tax irrespective of the fact you utilize it or not.
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