A life insurance policy is a contract with an insurance company. In exchange for premium payments, the insurance company provides a lump-sum payment, known as a death benefit, to beneficiaries upon the insured’s death. Typically, life insurance is chosen based on the needs and goals of the owner. Term life insurance generally provides protection for a set period of time, while permanent insurance, such as whole and universal life, provides lifetime coverage.
Life insurance policies can be categorised in three broad categories
ENDOWMENT These are the plans which pay a lump sum amount after a specific period which can be the result of policy maturity or the demise of policyholder. Typically the maturity of endowment plans are long-term ranging from 10 to 35 years. These are best suited for goals such as child education, marriage, or retirement planning.
MONEY BACK Financial Freedom also offers Money Back Insurance. This is a variant of an endowment plan with the benefit of getting a specified amount back within the tenure of the policy. The specified percent of maturity benefits are paid in installments by the way of survival benefits and the balance at the maturity of the policy.
TERM INSURANCE This policy is purely a risk cover policy wherein the beneficiary gets the specified amount on the demise of the policyholder. No survival benefits or maturity benefits are payable in this kind of policy.
Financial Freedom is generally used to describe the state of having sufficient personal wealth to live, without having to work actively for basic necessities. For people to be financially free, their assets should generate income that is greater than their expenses.