Life Insurance

It is a contract that offers financial compensation in case of death or disability. It helps to secure you and your family’s future financial security even in your absence. Some of the life insurance policies offer financial compensation after retirement or for a certain period.

For life insurance instalments can be made either fully or partly. That makes a lump-sum payment while purchasing insurance or by making periodic payments. These are also known as premiums. In exchange for this, your insurer promises to pay an assured sum to your family in the event of disability, death, or at a set of times.

Life insurance can be classified into further categories:

• Term life insurance
• Whole life insurance
• Universal life insurance
• Indexed universal life insurance.
• Variable life
• Variable universal life
• Group life

• TERM LIFE INSURANCE – it lasts for a few years before it expires. If a person dies before the expiry of time, a set amount of money is to be paid to the designated beneficiary also known as the death benefit.

When you make payment through instalments known as premium. You are paying for the death benefit that will go to your beneficiaries when you are dead. The death benefit can be paid out of a lump sum, a monthly payment, or an annuity.

To be noted, if however, you survive and not dead, no money will be paid to you or to the beneficiary.

• WHOLE LIFE INSURANCE – it is permanent life insurance because it does not expire. It covers the whole lifetime. It has a death benefit and a cash value. It is an investment like a tax-deferred savings account that is included in the policy. The cash values accumulate interest at predetermined fixed rates. It guaranteed a rate of return. Whole life insurance covers the whole life if you pay the premiums. The cash value components are more complex than term life insurance because of surrender fees, interest, taxes, and other stipulations.

• UNIVERSAL LIFE INSURANCE – it (UL) also has the cash value, like a whole life insurance policy. These premiums go towards both the cash value and the death benefit. It also has the benefit that in this policy: you can change the premium and death benefit amounts without getting a new policy.
• INDEXED UNIVERSAL LIFE INSURANCE – IUL is a type of UL insurance. But the cash value behaves differentiates the two. An index is essentially a group of investments like stocks and bonds. These insurances do not directly invest in the market. Instead uses the interest rate and performance of the specific index to set the interest rate policy. IUL insurance policy is not like some other permanent insurance policies their interest rates are minimum but guaranteed to be paid.
• VARIABLE LIFE INSURANCE – the money paid into variable life insurance cash value goes into a series of mutual funds. Like sub-accounts where you can get some decent growth. But you can also lose money depending upon the market.

This insurance can be used as an investment option. As it is a comparatively better investment option than whole life insurance. But you can invest in the sub-accounts only available through your policy. That means unlike the open market, you get a selective area to invest in mutual funds. That means you don’t get to choose. Though it is also a riskier option as well.

• VARIABLE UNIVERSAL LIFE INSURANCE – It is a combination of a universal and variable life insurance policy that is because they share many of the same elements. It enables you to adjust both the premiums and the death benefit amount while investing in the policy’s cash value. It presents the risk associated with it as the same as associated with the other insurance policies.
• GROUP LIFE INSURANCE – It is an employee benefits insurance provided by some employers. It is not exactly life insurance, but it is important to understand, how it is different from privately purchased term life. Most people think, if your employer is offering life insurance at no extra cost to you, it’s a great benefit. Make no mistake. If your employer is offering life insurance at no extra cost to you, it’s a great benefit. Get insured. But employer provident fund may not be sufficient to cover the life insurance policy to protect your family

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts that have been made to ensure the accuracy and correctness of the information published, White Code Legal and Tax shall not be responsible for any errors caused due to human error or otherwise.