Experts on the Types and Benefits of Non-Term Life Insurance Policies
Experts say term insurance is the simplest, purest form of life insurance that everyone can possibly need to provide coverage and protection for dependents. This market wisdom is widely accepted in personal finance circles.
On the Money Money Money special, CNBC-TV18 examines all other types of insurance policies and asks experts – whether you should consider any form of market-related policies or traditional plans, as they are. calls, when it comes to insurance and investment needs. To answer these questions, the channel met with Rahul Agarwal, CEO of Ideal Insurance and Harshvardhan Roongta, CFP, Roongta Securities.
Regarding open-ended insurance policies, Agarwal said that previously people bought traditional plans which were like an endowment and reimbursement. It was mostly about savings focused on less coverage, but the main idea was the savings and tax benefits, he said. Then unit linked insurance policies (ULIPs) became popular between 2000 and 2010. These fell into disuse due to very high fees but are now back with reduced fees, he said. Explain.
Agarwal said there are different types of traditional plans, which offer savings and risk coverage. These products depend on the proportion of the amount of savings and the amount of risk coverage. Reimbursement is a product that has the highest savings but the least component of risk coverage. The endowment policy, on the other hand, has 50 percent savings and 50 percent risk coverage. The third, Agarwal said, is whole life in which the risk coverage is greater and the savings portion is low. These plans are basically very similar, only the proportion of savings and coverage is different, he said.
Commenting on the three policies, Roongta said the endowment is basically a lump sum payment when the policy expires. The reimbursement would give an insured returns every five years until maturity, so at regular intervals and in a whole life policy, the payment is made after the death of the insured. he explained and added that some people plan the whole life insurance policy towards inheritance.
For more details, watch the accompanying video
(Edited by : Kanishka Sarkar)