Life insurance is an insurance, which helps the insured family at the time of his/her death. Death may be happened by accident or any serious illness. For this type of insurance, insured has to pay money to insurance company as a premium periodically when he/she is alive.
A. Term insurance policy: It is a risk cover for a specific period of time. In this policy holder’s family will be entitled with compensation only if he dies with in policy period. If the person purchases $100000 policy for 10 years, then his family will get the policy money only if he dies within that 10-year period. If he survives the policy period then the insurance company will keep the whole premium money. So there is no investment or saving in this policy. So it is pure risk cover insurance.
B. Whole life policy: It is an insurance that covers the risk from death, but here, it not important when the death occurs. In this insured pays money as premium to insurance company till his death. After his death the money will be paid to his family.
C. Endowment policy: In this policy insurance company will pay amount to insured even if he/she is alive in the policy period. If the policyholder dies in the policy period the whole money will be paid to his family. It is also a type of financial saving, because if is he/she is alive after whole period of policy, he will get some amount of money with other investment benefits. Here insured is offered different benefits like double endowment and marriage or education endowment schemes.