It is a means of protection from financial loss. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss.

It is an arrangement by which a company or the state undertakes to provide a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified premium.

LIFE INSURANCE

Life insurance is the most discussed stuff in the industry. Most of the people know about the insurance but they do not the difference of the same. The good thing about insurance is that the awareness has been increasing over a period of time. A decade back, people used to buy insurance because somebody forms their family or friends force him/her to buy it. But now people buy insurance to mitigate the risk. People have started understanding the need of an hour.

Life insurance can be classified:

Whole-Life Plan - insurance company collects premium from the insured till the retirement or the term of the policy and pays the claims to the nominees only after the death of the insured person. This helps the family to survive better after the death of insured.

Endowment - Insurance company collect premium form the insured for the certain period of time like 15, 20, 25, 30 years. Company pays sum assured to the nominees in case of death of the insured during the policy period or pay the premium paid by the insured with fix returns (as per policy document) to the insured.

Money back - the policy is useful for that investor who needs periodical payouts. The insurance company collect premium certain period of time which is called premium payment term, and pays percentage of sum assured to the insured on regular interval. If insured dies during the policy term, insurance company pays sum assured and accrued bonus to the nominees.

Term plan - in case of term insurance, insured pay premium to cover the death risk. Insured does not get anything from the insurance company, if he survives till the end of policy term. The premium paid for term cover goes to the company. The good part of this plan is, insured gets maximum death cover with minimum premium. Now a days, companies have come up with insurance with return of premium, if nothing happens to insured during the term of the policy, the company pays part of the premium back to the insured.

ULIP - it is a new flavor of insurance which is a mix of investment as well as insurance. Insurance companies collects premium form client and invest the same into equity and debt markets. The returns generated by this investment are passed on to the inventors at the maturity. The insured person gets the benefit of risk cover as well as the investment gains. The product also offers the flexibility of partial withdrawal after certain period of premium payments. In case of death of Insured, the nominee gets the sum assured or fund value, whichever is higher.