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A life insurance policy is a contract made between an individual and any insurance provider. The policyholder promises to pay a certain amount in monthly or quarterly instalments to reap benefits over a period of time. The life insurance policy is beneficial to policyholders or beneficiaries of the policyholder.
Why do you need a life insurance plan
What is Term Insurance?
A life insurance policy is a mutual agreement between an insurance company and a customer. It covers the life of a person and when his/her demise happens within the policy period the sum assured is paid to his/her dependents. This is the cheapest pure life insurance cover available in the market. The Term policies basically covers the life risk without any investment return on the premium paid. So if the insured survives the policy period, no premium is refunded.
Endowment plans for life insurance not only cover the individual's life in the event of death, but also provide maturity benefits at the end of the term. This policy gives insurance cover for the life of the assured and also gives a lump sum return after the policy period in case the insured survives the policy period. Hence this policy has an investment return component and hence mostly involves periodical payment of premiums. This is more of an investment product’.