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Term life cover
TERM LIFE COVER
Term life insurance is a type of life insurance policy that provides coverage for a specified period, known as the term. Unlike permanent life insurance policies, such as whole life or universal life, term life insurance does not have a cash value component or investment features. Instead, it offers pure life insurance protection.
Here are some key features of term life insurance:
1. Coverage Period
Term life insurance policies are typically purchased for specific durations, such as 10, 20, or 30 years. The coverage is in effect during the term specified in the policy.
2. Death Benefit
In the event of the insured person's death during the term, the policy pays out a death benefit to the beneficiaries named by the policyholder. The death benefit is usually a tax-free lump sum payment and can be used to replace the insured person's income, cover outstanding debts, fund education expenses, or any other financial needs of the beneficiaries.
3. Premiums
Term life insurance premiums are generally lower compared to permanent life insurance policies. The premiums remain level for the duration of the term, meaning they do not increase over time. However, once the term ends, the policy may be renewable at higher premiums or may require re-evaluation of the coverage.
4. No Cash Value
Unlike permanent life insurance policies, term life insurance does not accumulate a cash value or savings component. If the policyholder survives the term, there is no payout or return of premiums paid.
5. Convertibility
Some term life insurance policies offer a convertibility option, allowing the policyholder to convert the term policy into a permanent life insurance policy without the need for a medical exam or proof of insurability. This can be beneficial if the insured person's needs change, and they require lifelong coverage.
Term life insurance is often chosen to provide financial protection during specific periods of life when individuals have significant financial obligations, such as mortgage payments, children's education expenses, or income replacement needs. It offers a cost-effective way to obtain a high death benefit for a defined period.
When considering term life insurance, it is important to assess the coverage amount needed, the duration of coverage required, and the financial needs of beneficiaries. It is advisable to compare policies from different insurance providers, understand the terms and conditions, and seek advice from insurance professionals to ensure the selected policy aligns with individual circumstances and goals.
Annuity Plan( Pension Plan)
A Guaranteed Monthly Income Plan (GMIP) is a type of insurance policy or annuity that provides a regular stream of income to the policyholder or annuitant for a specific period. It is designed to offer a guaranteed income payout on a monthly basis, which can serve as a stable source of income during retirement or any other predetermined period.
Here are some key features of Guaranteed Monthly Income Plans:
1. Premium Payment
The policyholder or annuitant pays a lump sum premium upfront to purchase the GMIP. The premium amount depends on various factors, including the desired income amount, duration of income payments, and the policyholder's age and health.
2. Guaranteed Income
Once the policy is activated or the annuity is purchased, the policyholder or annuitant receives a guaranteed monthly income for a fixed period. The income amount is predetermined and does not fluctuate with market conditions.
3. Income Period
The income payout period is typically chosen by the policyholder or annuitant at the time of purchasing the GMIP. It can range from a few years to several decades, depending on individual preferences and financial goals.
4. Death Benefit
In case of the policyholder's or annuitant's death during the income payout period, some GMIPs may offer a death benefit to the beneficiaries. This can be in the form of a lump sum payment or continuation of the monthly income to the beneficiaries for the remaining period.
5. No Cash Value
GMIPs generally do not have a cash value component or an investment component. The focus is primarily on providing a guaranteed income stream rather than accumulating savings or investment returns.
6. Limited Flexibility
Once the GMIP is purchased, the income amount and payout period are usually fixed and cannot be altered. There may be limited or no provisions for withdrawal of the principal or changing the income payout terms.
Equity Linked Saving Schemes (ELSS) are tax-saving mutual funds that offer tax benefits under Section 80C of the Income Tax Act. They primarily invest in equities and have a lock-in period of three years.
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