What are the different Types of Insurance Policy?

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Life Insurance Corporation has a num­ber of schemes to offer. The person can get himself insured by a policy of his choice and convenience. Some of the schemes are as un­der:

1. Whole Life Policy

The policy holder pays the premium monthly, quarterly, half yearly, or yearly. The benefit of the policy goes to the nominee only after the death of policy holder. A minimum value of the policy in this scheme is? 1000/-.

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2. Limited Payment Life Policy

In this scheme, the policy holder pays the premium for a certain period of time but the benefit of insurance goes to the nominee only after the death of the policy holder. The minimum value of this policy is? 500/-.

3. Endowment Insurance Policy

In this scheme, the payment of insured amount is made after a fixed period. But in case of death of policy holder before the stipulated period, the full amount of policy is paid to the family members. The rate of premium in this scheme is higher than that of whole life policy.

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4. Joint Life Endowment Policy

Two persons are insured jointly in this scheme. The salient feature of this policy is that in case of death of either of the policy holder, the survivor gets the full amount of the in­surance; otherwise the payment is made to both the persons after the expiry of stipu­lated period. The rate of premium in this policy is higher than other schemes as the insurance cover is for two persons.

5. The Fixed Term (Marriage) Endow­ment Policy or Endowment Annuity Policy.

This policy was introduced with the aim for the marriage or education of the chil­dren. In this scheme the insured amount is received after the expiry of the predetermined period.

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But in case of death of the policy holder before the expiry of the staid period, no further premium is to be paid but the pay­ment will be made on the maturity of policy. In the scheme, the payment is for marriage age in lump sum but formation, the payment is made in 10 half y instalments. The minimum value of this is? 1000/-

6. Double Endowment Policy

As name indicates, the policy holder gets li­the amount of policy on maturity. In case death of policy holder before the maturity the family members gets only the insured amount.

7. Convertible Whole Life Policy

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The policy holder has the option of converting present policy into any other policy fixed duration. The difference in premium due to this conversion will have to be paid to the policy holder.

Provident fund schemes

This scheme is for all sections of employees and it is compulsorily for all of every employee invests a part of his income in this scheme. This scheme is of two tee

1. General Provident Fund

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2. Contributory Provident Fund

1. General Provident Fund.

This scheme is exclusively meant for Government employees. In this scheme every employee half pay a minimum of 10% of his basic pay p| month. There is no upper limit in this scheme the amount is deducted at source. After retirement or in case of death, this amount along with interest is paid to the person or His nominee. This amount is exempted income tax.

2. Contributory Provident Fund.

Hi scheme is for non-government or semi-government employees. In this scheme each employees contributes a minimum of 12% of his b’ pay. An equal amount is contributed by management of the organisation in employee’s account.

This amount along w: interest is paid to the employee at the time retirement. In case of death, the amount paid to his nominee. The amount contribute by the employee is exempted from income

15 Years Public Provident Fund:

Person can open an account in State Bank India under this scheme by depositing a mini­mum of? 100/- per annum. This amount is to be deposited for 15 years. After expiry of this period, the person gets full amount along with interest. The rate of interest is 11% per annum. The total amount received on the maturity is exempted from income tax.

Units

Units are sold by Unit Trust of India. Each unit is of? 10/-. A person has to take a minimum of 10 units but there is no upper limit.

Units can be purchased from leading banks, post offices or commission agents. Unit trust invests this money in various indus­tries. 90% of the profits are paid annually to the unit holders as dividend. Dividend up to 1000/- is exempted from income tax.

National Savings Certificates

This scheme was started by Government of India. Under this scheme a person can purchase these certificates. The duration of these certificates is 6 years. These certifi­cates fetch wide interest. Or due date the purchaser gets the amount of certificate along with interest.

In case of death, the full amount is paid to the nominee. In case purchaser needs money before the due date, he gets the amount of certificate along with proportion­ate interest. The money invested on these certificates is exempted from income tax and the interest received is also tax free.

Shares

Share is a method of acquiring partner­ship in a company. The partnership depends upon the number of shares purchased. The company offers Initial Public Offer (IPO) when they need money for the investment. The share is generally of a value of? 10/- but allotted at a premium price. A person can invest his sav­ings in shares after carefully going into the profile of the company.

A person (investor) gets higher return in case the company is making profit. The profit earned is called ‘dividend’ and is free of tax up to a certain limit. Sometimes, there is a risk of losing money when the company suffers losses. The share price (after IPO) is governed by share market.

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