A Traditional Life Insurance Policy is an insurance product in which the policyholder pays premiums into a general fund and benefits are calculated using statistics. Some policies distribute a share of the profits of the Insurance Company across the policyholders. These are termed with-profits policies. Other policies which provide no right on the profits of the company are known as without profits policies. The popular types of Traditional Life Insurance schemes are,
1.Money Back Policies
A Money Back Policy provides life coverage during the policy term and the benefits are paid in installments by way of survival benefits. A percentage of Sum Assured is paid back to the insured at periodic intervals. Most of the Money Back Policies are with profit schemes.
2.Endowment Assurance Policies
It is a combination of Insurance and Investment. The Insured/Beneficiary will get a lump sum amount along with bonuses on policy maturity or death event. A certain amount is kept for Life Cover, while the rest is invested in a pool of low-risk securities by the Insurance Cmpany.
3.Whole-Life Plans
These policies give a guarantee to remain in force for the insured’s entire life time. The Sum Assured is paid to the Beneficiary during death event. Normally a Whole-Life policy covers the life till the age of 100 years, and the Insurance Company will pay the maturity amount to the Life Assured, if he or she outlives the age of 100 years.
4.Term Life Insurance Plans
The most fundamental and simplest of Insurance products is a Term Insurance Policy. Term Insurance Policies ensure that in the death event of the Life Assured, the Beneficiary gets the Sum Assured. Term Plan provides risk coverage for a certain duration. If the Insured dies during the policy term and the policy is in force, then the death benefit will be paid to the Beneficiary. It is the cheapest Life Insurance Product in terms of premium. Some Term Insurance Policies pay the sum of the paid premiums during the end of the term, if the insured outlives the policy term. This product is known as Term Insurance With Return Of Premium.