Know About Different Life Insurance Plans

Today, almost everybody owns a life insurance policy. It could be for various reasons like investment purposes or for tax benefits, but the key point is that it provides complete peace of mind. With insurance plans, one does not have to worry about their family’s future security in their absence. These plans provide financial security to the surviving family members after the death of the insured.

Insurance is a must for anybody who has financial dependents. The age bracket to buy a insurance plan is approximately from 18 – 75 years of age. Most of the banks have a minimum and a maximum amount of money to be assured.

Types of Life Insurance Plans

Broadly, the two main types of insurance policies are term insurance and whole life insurance. Term Insurance Plans are the most basic and simplest plans. These plans provide a cover for risks only for a short period of time. After the term comes to an end, you can renew the plan but chances are that the premiums will rise. These plans are economical.

On the other hand, whole life insurance plans are expensive but these policies continue for as long as the insured lives. These plans are sometimes treated as investment options because one does not receive any money till the death of the insured.

Other plans include unit link life insurance plans that offer great investment options along with financial security. Usually, one has to pay two separate premiums – one for the life insurance and one for investment. These plans are beneficial as they provide financial solutions during your lifetime as well as after your lifetime to your family members.

There are retirement insurance plans available for senior citizens too. Insurance policies are extremely important for such people as these plans offer security and freedom to the surviving spouse. Child plans are another choice in insurance plans. These policies provide financial aid for your child’s education, marriage, etc. Another option are the health insurance policies. Health insurance policies provide a cover for medical expenses. These plans are suitable for people who suffer from health problems like diabetes, cancer, etc.

Riders in Life Insurance

Riders are the additional benefits that one can add to their life insurance policies. However, the premium amount increases with the inclusion of these riders. There are several types of riders in insurance plans offered by banks. The most popular of all are:

Critical Illness Benefit Rider: It offers financial aid in case the insured gets diagnosed with critical diseases like cancer, heart attacks, kidney failure, etc. Accidental Death and Disability Benefit Rider: In case the insured becomes disabled following an accident, this rider covers this risk.

Tax Benefits

Tax benefits as per the Income Tax Act, 1961 offer a deduction in the premium amounts, investments, dividends, etc. However, these benefits are subject to amendment regularly.

These Plans protect the needs and requirements of your loved ones in case of unfortunate events. It helps keep your family safe and secure even when you are not around.

Over 50’s Life Insurance Plans Good Value?

One of the most popular life insurance plans currently advertised in the press and on televisions are the over 50’s plans or you might sometimes hear them called funeral plans and advertised with the aim of covering the funeral costs on death.

Typically these policies offer a free welcome gift like shopping vouchers when you sign up as a way of encouraging the potential customer to apply and have no requirement for any medicals or medical questionnaires and if you die after one or 2 years depending on the insurer you will get paid on your death the amount your policy is for.

But there is a cost for this, as using the figures for one of the UK’s leading life insurers a 55 year old non smoker taking out an over 50’s life insurance policy paying £6 per month would receive life cover of £1131 life cover. This is where it gets interesting as the same company offers a non over 50’s life plan and the same 55 year old non smoker taking out a life plan over 30 years and paying the same £6 per month would receive £6436 life cover or almost 570% more cover for the same monthly payment!

So if you are in good health it is possible for the same monthly payment your loved ones could receive an extra £5,005 on your death.($8088)

Before jumping to the conclusion that they are not good value for money though a few of things need to be considered.

  1. The over 50’s plan does not require a medical and if you are not in good physical health it is possible you might fail the medical so the over 50’s version might be the only option available to you, and regardless of the state of your health your loved ones will get the money if you outlive the qualifying period.
  2. The over 50’s version continues until the age of 90 and then cover continues for free (If you are lucky enough to live that long it means you have paid out £2,520 premiums but will only receive back £1131)
  3. The under 50’s version stops at 85 so if you die after this date the premiums you have paid will be lost as you will no longer have cover.

So if you are looking for life insurance shop around and consider your options carefully as just because a plan is advertised very heavily on television and in the press does not mean that it is offering good value. The point of all life cover is to provide cash for your loved ones or dependents on your death and the more cover you can get for the same monthly premium the better.

More About the Term Life Insurance Plans

There are several insurance plans that can suit the needs of every client. Term life insurance is coverage where a client pays a fixed premium rate during a specified period. The beneficiaries of the life insurance can only get the benefits paid if the insured person dies during the contract period. However, if the insured person survives the period of the contract, he can opt to let the coverage go, or he may continue to pay the premium and extend the contract period. The company can choose to include new terms and conditions to the contract if the client chooses to extend the contract period.

Term life insurance plans allow clients to pay premiums for a specified period, which is mostly up to 30 years. With this in mind, clients should consider their lifestyles to see if they are at risk of dying sooner than they think. Many older clients can consider taking short term life insurance to increase the chance that the insurance will be effective, because they do not have a long time to live. On the other hand, young clients can take long term insurance coverage, to make sure that their families get payment when sudden death occurs.

There is also a whole life insurance coverage which offers clients the opportunity of using their premiums as an investment option. This insurance type is known as flexible premium adjustable insurance. The client who opts to buy this insurance can use the premium he or she accrues, through the years to buy items or to borrow loans using it as collateral. The main factors which affect the use of this policy as an investment option is the length of the contract as well as the face value of the policy. The premiums which a client pays also affect the effective use of this insurance as an investment opportunity. A client should try using quote comparison, so that he gets the best quotes.

When getting whole life insurance coverage with adjustable premiums, a client should consider the time it will take before the policy can accrue cash value. Many insurance companies deduct the amount a client borrows against the policy from the death benefit pay out, if he does not repay the amount before his death. With this in mind, many clients would go for the policy which accrues cash value faster than the rest. Before getting into any contracts, a client should use quote comparison, to decide which insurance policy suits him or her best.