Tuesday, 21 June 2011

Life Insurance Policy- Know your policy

Life insurance policies are more than that of an investment.  An insurer cannot protect his life by taking a life insurance policy, but he can assure a certain amount of money to him or to his survivors when a disability or death occurs. The Life insurance Company gives the sum assured or more than that, when the insurer dies or a certain percentage of disability occurs. You must be aware of a few terms about your policy, when you take a life insurance policy.

Life Insurance Policy Premium.

The amount you have to pay regularly or lump sum for getting the insurance protection. This is related with your age, the sum assured, term of insurance, Mode of premium etc. You can opt for monthly, quarterly, half early, yearly or one time premium (single premium) as per the terms of insurance policy you have chosen. The most profitable premium is single premium but it will be a big amount. If you choose monthly premium you have to pay comparatively more than that of other premium options. For example the monthly premium, quarterly, half yearly and yearly premium of the same policy for the same coverage may be 100, 275, 500 and 950 respectively.  So the annual premium is profitable. You should pay comparatively less amount.

Term of Insurance policy.

Term of life insurance policy is the time span of getting the insurance coverage. The longer period is good than short term life insurance policies. The age of joining the insurance policy is also important. When you join Life insurance at an early age the premium will be less. So join the policy at an early age and take the maximum term of insurance. The term of insurance policy is varied from one year to 55 years or more. So take a long term policy and it is beneficial for you.

Sum assured

The minimum amount your family receives when you die or disabled within the policy term and this is known as the insurance cover. But normally the family may receive more than the sum assured as per the terms and conditions of the policy including bonus, guaranteed addition etc.

Bonus of life insurance policy

This is the amount an insurance policy receives every year as per the terms and conditions of the insurance policy and the amount will be accumulated every year till the policy matures or the death of the insurer happens. The Bonus amount will be paid in addition to the sum assured.

Premium paying term

The time span you have to pay premium and normally the premium paying term is same as term of policy. But some insurance policies allow you to pay premium for a few years and the insurance coverage will be more than the premium paying term. However the longer premium paying terms reduces the amount of premium.

Guaranteed Addition, Survival benefit, Maturity benefit, Death benefit

Guaranteed Addition, Survival benefit, Maturity benefit, Death benefit etc., are other terms which an insurance policy have and you must ensure all in detail before joining a policy.  You may ask about this to your insurance agent, or to the insurance company. Before joining the insurance policy you must be aware of all these in details and read the terms and conditions of the policy well to avoid any dispute or confusion. Do not hide any necessary details which are requested in the application form. It will avoid the chance of refusing your claim. Some illness needs a high premium and some requires further medical checkup before joining the policy. So know your insurance policy well and in detail before joining the policy.

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