Insurance Planning

Insurance is the transfer of risk by an individual, such as yourself, or an organisation, such as your business, to the insurance company. You or your organisation will thus be known as the policy owner. The insurance company receives payment in the form of premium and will compensate you in the event of losses or damages sustained by you.

All too often we hear about various types of insurance policies without really understanding what they are and more importantly, what they protect. The truth is, there are two main types of insurance, namely life insurance and general insurance which covers different aspects in your life.

Types of Insurance

There are two broad types of insurance:

Types of Insurance
Life Insurance
General Insurance
Term Life
Money-back policy
Unit-Linked Insurance Plan
Pension Plans
Motor Insurance
Home Insurance
Health Insurance
Fire Insurance

What is Life Insurance

Life insurance is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money in exchange for a premium, upon the death of an insured person.

Life insurance can help you support your family even after retirement. Depending on what it covers, Life insurance can be classified into various types:

Term Insurance	– It is the most basic type of insurance. – It covers you for a specific period. – Your family gets a lump-sum amount in the case of your death. – If, however, you survive the term, no money will be paid to you or your family.
Whole Life Insurance	– It covers you for a lifetime. – Your family receives a certain sum of money after your death. – They will also be entitled to a bonus that often accrues on such amount.
Endowment Policy	– Like a term policy, it is also valid for a certain period. – A lump-sum amount will be paid to your family in the event of your death. – Unlike a term plan, you get the maturity proceeds after the term period.
Money-back Policy	– A certain percentage of the sum assured will be paid to you periodically throughout the term as survival benefit. – After the expiry of the term, you get the balance amount as maturity proceeds. – Your family gets the entire sum assured in case of death during the policy period. This is regardless of the survival benefit payments made.
Unit-linked Insurance Plans (ULIPs)	– Such products double up as investment tools. – A part of your premium goes towards your insurance cover. – The remaining amount is invested in Debt and Equity. – A lump-sum amount will be paid to your family in the event of your death.
Child Plan	– This ensures your child’s financial security. – In the event of your death, your child gets a lump-sum amount. – The insurer pays the premium amounts after your death. – Your child will continue to get a certain sum of money at specific intervals.
Pension Plans	– This helps build your retirement fund. – You can get a regular pension amount after retirement. – In the case of your death, your family can claim the sum assured.