Life insurance plans are the means whereby the losses that have occurred through one's death are to some extent reduced by the compensation provided by an insurance company. The death of any member of the family by means of accident, illness or naturally, means a loss of income for the family. Life insurance plans try to assist a family or individual to minimize the loss.
Life Insurance Plans: Helping the Policyholder and the Family
Life insurance plans help a policyholder in various ways, both before and after one's death. After a plan holder retires from service, the life insurance plan can offer him/her a pension amount and can also offer the family members some kind of fiscal support depending on the contract.
Life Insurance Plans: A Fixed Process
Normally, life insurance plans work in a fixed process. One pays a fixed amount of money, known as a premium, to the insurance company on a monthly, quarterly or yearly basis depending on the contract between the insurer and the insured. The premium amount is measured based on the money the insured person would receive after his/her death or after the life insurance plan matures. After a period of time, it is also possible to gain dividends from life insurance plans.
Life Insurance Plans: Options
There are five basic types of life insurance plans. They are:
Term life insurance plans: Term life insurance plans insure the policyholder’s life for a specific period of time. The insured can also periodically alter his/her life insurance plans depending on his/her need.
Permanent life insurance plans: This type of plan insures the policyholder’s life and also guarantees cash back as soon as the plan matures. This of course, depends on the fact that the insured person keeps the life insurance plan in force by paying the premiums on time.
Whole life insurance plans: This type of life insurance plan also secures insurance for one’s entire life. As the premium is high, it is at times not feasible for common people.
Universal life insurance plans: This type of life insurance plan allows many facilities, including insuring one's whole life, provided the premiums are paid on time and the life insurance plan is kept going. This plan does not charge high premiums.
Group life insurance plans: Group life insurance plans provide the option for a company or a family to collectively insure the members of the family or the company. This plan provides adequate cover for all the members and the premium rate is also low because of the collective amount of premiums. When someone leaves the group, his/her personal insurance plan can be taken out of the group life insurance policy.