Sunday, April 22, 2007

Types of Insurance Policies

There are actually not many type of Insurance Plans around, yet many people are confused with them. Let me give you some pointers on how to identify them...

1) Whole Life Policies
a) Meant to gives you the necessary whole life coverage - As simple as that!!!
b) Premium can be payable whole life or for limited period
c) Accumulate Cash Value (Slower pace compared to most endowment policies)
d) Not a very effective savings plan as its primary role is to provide whole life cover

2) Endowment Policies
a) Meant as a savings plan and there is a maturity date.
b) The coverage is small because most of the premium are put into savings
c) Hence Cash Value accumulate faster compared to Life Policies
d) Serve well as a children education savings plan or a retirement plan

3) Term Policies
a) Meant solely for protection. Usually for a fixed period of time
b) No Cash Value
c) Very low premium for high coverage
d) Suitable for young families when insurance needs are the highest

4) Investment Linked Insurance Plans
a) Meant as a regular savings but via an investment instrument
b) You choose where to invest according to your risk
c) You may attach insurance coverage to fit your needs.
d) All charges and returns are very transparent

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