Life insurance policies

 Question:- Describe Various Types of Life Insurance Policies 

Answer:- Life insurance policies can be divided into the following parts: 

1. Whole Life Insurance Policy 
2. Endowment Insurance Policy 
3. Insurance Policy based on Profit Distribution 

1. Whole Life Insurance Policy 

Whole Life Insurance Policy refers to an insurance policy under which the insuring company promises to pay the policy amount to the nominee upon the death of the insured person. The main objective of this type of policy is to provide financial assistance to the family, because in this policy, the policy amount is received by the family of the insured person upon their death. The premium rates in this policy are quite low, but still, this policy is not popular. 

2. Endowment Insurance Policy 

Endowment insurance policy refers to an insurance policy under which the company providing the insurance promises to pay the policy amount to the insured person upon maturity, or to their legal heir if the insured person dies before maturity, or to the insured person themselves if they survive the specified period. The main objective of this type of policy is to help both the individual and their family. This is because, in this policy, if the insured person dies, the amount of the policy goes to their legal heir, or if the insured person does not die, it goes to them. 

The premium rates in this policy are quite high. However, despite this, this policy is popular. 

Endowment insurance policies are of the following types: 

1. Simple Endowment Insurance Policy 
2. Pure Endowment Insurance Policy 
3. Double Endowment Insurance Policy 
4. Anticipated Endowment Insurance Policy 
5. Deferred Endowment Insurance Policy 
6.Joint Endowment Insurance Policy 

1.Ordinary Endowment Life Insurance Policy - Ordinary Endowment Life Insurance Policy refers to such an insurance policy under which the insuring company promises to pay the policy amount to the insured person's heir or to the insured person himself upon his death, or after a fixed period if he does not die. 

2. Pure Endowment Life Insurance Policy - Pure Endowment Life Insurance Policy refers to such an insurance policy under which the insuring company promises to pay the policy amount to the insured person after a fixed period. However, if the insured person dies during this period, the insuring company does not pay the policy amount to his heir. 

3. Double Endowment Life Insurance Policy - Double Endowment Life Insurance Policy refers to such a policy under which, if the insured person dies, the insuring company promises to pay a fixed amount to the heir of the insured person. And if the insured person does not die within a fixed period, double the amount of the insurance is paid. 

4. Anticipated Endowment Life Insurance Policy - Anticipated Endowment refers to a type of policy under which the insurance company promises to pay the sum assured to the heir of the insured person upon their death. If the insured person remains alive, then in that case, they are paid 1/5th of the insurance amount. After some years, they are again paid 1/5th of the insurance amount, and then after some time, 3/5th of the insurance amount is paid. 

5. Deferred Endowment Insurance Policy: A deferred endowment insurance policy is similar to a regular endowment insurance policy. However, the main objective of this type of insurance policy is to arrange funds for the education of children and their marriage. Under this policy, the insurance amount is paid after a fixed period of deferment, not upon the death of the insured person. 

6. Joint Life Endowment Insurance Policy: A joint life endowment insurance policy refers to an insurance policy under which the insurance premium is paid by two or more individuals, If death occurs, in that case, the insurance company pays the insurance amount to the remaining individuals. This type of policy is usually taken jointly by partners and husband-wife. 

3.Insurance Policy based on Profit Distribution 

Based on profit distribution, insurance policies are of the following two types: 

1. Participating Insurance Policy 

2. Non-Participating Insurance Policy 

1. Participating Insurance Policy: A participating insurance policy refers to an insurance policy under which the insurance company promises to give the insured person, after a fixed period, a certain share of its profits along with the insurance amount. This is called a Bonus. 

 • Note: Currently, LIC is mandated to distribute 95% of its profits among the policyholders. 

2. Non-Participating Insurance Policy: A non-participating insurance policy refers to an insurance policy under which the insurance company promises to pay the insured person a fixed amount after a fixed period.