A vital part of any financial planning process is to ensure that ones family and the assets are protected. To help a person plan for the unexpected things in life such as; living too long and dying too early, one needs to review the economic value of ones current life. This particularly calls for a better understanding of the type of insurance plan, that best suits an individual.
Policies with bonus offer more than the sum assured if the individual survives the term, whereas the ones without-bonus offer only the sum assured.
Further, with-bonus policies are classified into three broad types: Endowment with profit: The nominee receives money immediately on the death of the insured if he survives.The insured receives money only at the end of the term.
Money back policies: On death of the insured, the nominee immediately receive the money. If the insured survives the term, he is paid money at regular intervals over the term of the policy. These policies cost more than endowment with profit policies. Annuities and Children's policies: The nominee receives a guaranteed amount of money at a pre-determined time and not after the death of the insured. If the insured survives the term he is paid off the money at the same pre-determined time. These policies are best suited for covering expenses on Childrens education, marriage etc.
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