Guddan Tumse Na Ho Paayega

In the event of your untimely demise, you will almost certainly need life insurance coverage so as to be able to protect the financial interests of your loved ones or even any organization that might be utterly reliant on you for their sustenance. Indeed, for this reason,  it is of pivotal importance for you to acquire a basic knowledge of life insurance and to also familiarize yourself and your loved ones with the same. This way you would be well prepared for just about any eventuality. Remember, “forewarned is forearmed”.

Broadly defined, there are essentially two main categories of life insurance around, and what is more is that they both have completely different procedures and policies as well as several really unique features. This is to ensure that they are able to appeal to various different individuals who come from all walks of life. 

o   Term life insurance

Term life insurance is widely considered to be the standard life insurance policy that basically provides broad based coverage for the beneficiaries, albeit for a very specific period of time. In layman’s terms what this means is that should the holderpolicy pass away, within the specific term (as mentioned in the policy document), then the beneficiary (or beneficiaries as the case may be) who is clearly mentioned in the form will subsequently be entitled to the (death) benefits of the insured party.

o   Example 1

Mr. John takes out a life insurance policy in which Mrs. John is the beneficiary. The policy is valid for a period of 5 years.  During that time period, Mr. John passes away. The full amount as specified in the policy will be handed over to Mrs. John

o   Example 2

Mr. Smith has a ten year insurance policy, which he does not renew after the expiry of the term period.  In the event of his demise, ‘after’ the expiration of the policy, his wife and children get nothing from it.

o   Premium rates

The cost of an insurance policy is often referred to as a premium.  Premium rates are calculated annually, and they are charged as per the health and age of the insured person. These premiums are low for healthy young people, but they increase with the passage of time and the development of any chorionic conditions with regard to the health of the insured party. A simple rule of thumb here is that the healthier and younger you are, the lesser the premium payments will be per annum, and vice versa.

o   Permanent life insurance

Permanent life insurance, as the very term implies, basically provides lifelong coverage for the policy holders as long as they continue to pay their annual premiums. This is more of an open ended policy that has no expiry date as such. It will expire only when annual premium payments are stopped.

In a nutshell, these two insurance policies are the most common types of life insurance policies around.