Life Insurance Policies - Kinds And Categories

Life Insurance Policies - Kinds And Categories

Classification of Life insurance policies is broadly dependent on the following criteria:

I. Policies based on Duration

• Whole life insurance policy - Under this category, the periodical payments of premiums are paid by the Life Assured throughout his lifetime, and the amount assured becomes payable only on the death of that person. In other words, a whole-life insurance plan resembles a Term Assurance Plan for an unspecified period, which is dependent upon the duration of the life of the assured. 

• Limited Payment Whole life Policy - It is a customization of an original ‘whole-life policy’, where the Life Assured determines the period for which the premium is to be paid, but the assured sum is payable only on the death of that person. 

• Convertible whole-life policy - This includes a policy, which was originally a limited payment whole life policy, but comes with an option of being converted to an endowment plan after a certain number of years. In case the policy is converted, the premium is certainly increased. 

II. Term Insurance Policies

Term insurance is for a shorter period. The sum assured is payable only when there is death of the Life Assured, with such limited period. In case the assured person survives, the assurance ends on the expiry of such fixed period. Types of prevalent term insurance policies are as below:

• Guaranteed level Term Insurance Policies - It falls under the category of most common term insurance taken by people. It refers to a fixed period of the policy, during which the annual premium does not increase. This generally is for duration of 10 years or more. 

• Annual Renewable term Policies - An annual renewable term life insurance policy denotes a short-term policy, which is renewable each year for a definite time length. 

• Return of Premium term insurance - In this type of term insurance policy, the premium is returned in case the assured person survives after the expiry of the of the policy term.  These policies are generally for a term of 15, 20 or 30 years. 

• Decreasing term insurance - Decreasing term insurance policy denotes that with the passage of time, the claim decreases. In other words, the benefit on death reduces over the period of the policy. 

III. Universal Life Insurance Policies:

Universal life insurance policies are a mixture of both, term life insurance and whole life insurance, and provide a combination of the protection of traditional term insurance and the value growth attribute of whole-life insurance. 

Which Life Insurance Policy should you choose?

As much as it is important to have a life insurance policy in your name, it is equally important to choose the right policy for yourself. The best way to avoid confusion and mistake is to take help from an insurance agent. Insurance agents in Geneva can help to secure your family’s future, by providing all kinds of financial assistance they need. They offer a number of insurance policies to choose from, as well as help you in making the right choice.