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Life Insurance and its Types - Class 11 | Class 12 | HSC | SYJC (in english) - YouTube
Channel: My Learnings
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What is life insurance? - Under life
insurance, the subject matter of
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insurance is human life. Under life
insurance, human life is insured against
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various risks like death, accident etc.
Life insurance is basically for legal
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heirs of the person insured( i.e;
legal heirs of the person on whom the life
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insurance is taken). So in event of death
of the person insured, the insurance
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amount goes to the legal heirs. What are various types of life insurance? - First
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Whole Life Policy - Under this policy,
whole life of a person is insured. The
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person who is insured, cannot receive
any amount under this policy. The insurance
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amount is paid to the nominee or the legal heirs on the death of the person insured.
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The rate of premium is very low in
case of whole life policy. Second is
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Term Plan - Term Plan is very similar to the
whole life policy. The only difference is
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under term plan, the person is insured for a
specific period only like 10 years, 15
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years etc. The premium of term plan is
the lowest among all types of life
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insurance policies. Suppose if a person
has taken a term plan for say ten
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years, his nominee or legal heirs get the
insurance amount if the person insured
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dies within the term of the plan (which
is ten years in our example). If the
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person survives the tenure of the policy,
he gets nothing in return.
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Third is Endowment Policy - Again this
policy is not for the whole life. It's
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for specific period only. Under this policy, the nominee or the legal heir gets sum
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assured ( i,e; insurance amount plus a
bonus) in event of death of the person insured
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Bonus is some extra amount which is
paid by the insurance company over and
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above the sum assured. However, if the
death of the insured doesn't happen
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within the tenure of the policy, then he
himself gets the sum asured plus
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the bonus on completion of the term of a
life insurance policy. The bonus amount
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depends on the income earned by the
insurance company by investing a certain
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portion of premium in various assets.
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Money Back Policy - Under this policy, a
certain percentage of the insurance
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amount is paid regularly to the person
insured during the lifetime of the
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policy. That amount may be paid after
every three years or say four years or
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may be even 5 years (depending on the kind of policy that he has taken). However in event
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of death of the person insured, the
nominee or legal heirs get the full
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sum assured. Joint Life Policy - Under this,
there are two or more individuals who are
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jointly insured. For example, it could be
husband and wife or maybe all the
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partners of a partnership firm. The sum
assured is paid at the end of the term
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of the policy or on death of any one
person out of the two people insured
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whichever is earlier. Annuity Policy - This policy is basically for retirement
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planning. Under this policy, the person
insured pays the premium in lump sum or
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in installments over a certain
period of time. The person insured will
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receive a specific sum periodically from a specified date onwards, either
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for life or for fixed number of years.
Just to give you an example, the person
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will get say Rs.10,000 every month
after the age of 40 years and he may
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receive it throughout the life or only
for a certain number of years (depending
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on the terms and conditions of the plan)
Unit-linked insurance plan or ULIP -
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This policy is very similar to the
endowment policy. Under endowment policy, a
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certain percentage of premium amount is
invested by the insurance company in safe
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investments like government bonds etc
and the bonus is being paid out of the
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income generated by the insurance
company from these investments. So there
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is not much risk involved in such investments and hence surety of getting a
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decent bonus amount is much more. Whereas under unit-linked, the investments done by the
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insurance company are in slightly riskier assets like shares. So the surety of
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getting a good bonus is not there and
you may also end up getting a
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negligible bonus or maybe even a zero bonus.
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