Low Premiums Or High Returns Life Insurance Policy
A life insurance policy is arguably one of the most important investments an individual can make and that is why people are always battling between low premium or high return life insurance policies. Since low premium policies and high return policies can be different from each other, the benefits they provide are also different.
When it comes to life insurance there are so many plans you can choose from that sometimes people don’t even bother looking into the pros and cons of each before choosing one. This, needless to say, is a huge mistake. Before buying any life insurance policy you must always first understand what the policy offers and how that offer affects you. Since the battle is always between paying the lowest premiums and getting the highest returns lets take a look at what low premium policies and high return policies actually are.
Low Premium Life Insurance Policy
The lowest premium life insurance policies can be the term insurance policies. These offer subscribers a fixed amount of coverage for a fixed period of time for a premium that is easily affordable. They are even referred to as the most basic form of life insurance at times. What happens with a term policy is that you enter into an agreement with the insurer that you will receive a cover of a certain amount (sum assured) for a certain period of time, for which you will pay a premium which is generally pretty low. Once the time period is over the policy expires and you are no longer covered. However, in the event of your death, the nominee can claim the sum assured. Apart from low premiums other benefits of the term plan also include tax benefits up to Rs. 100,000 under section 80 C.
However, brilliant as it may sound, the down side to these insurance plans is that there is no maturity benefits nor are there any survival benefits with these.
High Returns Life Insurance Policy
When it come to life insurance, some people want more than just a sum assured in case of an untimely death. This is where high returns life insurance policies come into the picture. There are many policies that offer returns to policyholders. Lets take a look at some of the types of policies that offer returns.
ULIPS (Unit Linked Insurance Plans)
ULIPS are a slight departure from the regular life insurance policy structure. It, as the name suggests, this type of life insurance is linked to investments and protection. The benefits of such a plan include things like tax benefits, top-up facilities, choice of investment between debt and equity markets and variable levels of protection.
Endowment Assurance Policy
With endowment assurance policies terms last for 10, 15 or even 20 years and are generally investments that give high returns. In these plans the policyholder gets a large sum of money when the policy matures. They may even get some other benefits like a monthly income, but that depends on the insurer. The flip side of these plans is that the premiums may be quite high for such plans.
Money Back Policies
These policies offer policyholders a wealth of benefits like regular income, high maturity amounts and bonuses paid on maturity of the policy. The income and maturity amounts will be tax free under section 10(10D) and you can even claim tax benefits on the premium paid under sec 80C.
As stated earlier, a life insurance policy could be the single most important investment you might make, so when you do decide to make it, its best that you know exactly what you want out of the policy you by. Whether you go in for low premiums or high returns life insurance policy, the fact remains that choosing the best policy is not always easy. That is why its always best to know what you are getting into before hand.