• Kalpesh Agrawal

Introduction of Long-Term Insurance

In a very simple term, A long-term contract is a contract in which the policyholder gets coverage from the potential risk for more than one year, or the insurer extends the term of the contract more than one year.

Life Insurance is the most common type of long-term insurance, also this is the simplest long-term insurance because death is the only contingency considered. Other contingencies can also be included like, disability or illness, but that makes the contract more complicated.

Types of Underwriting:

In a broad manner, there are two types of Underwriting.

  1. Financial Underwriting: This information helps the underwriter to make sure that the sum assured of the policy is sufficient for the policyholder and his/her family.

  2. Medical Underwriting: For the underwriter, it is important to know the medical condition of a policyholder. Eg. If the person is buying an endowment plan and if his/her medical condition is not good, mortality is high in that case.

Types of Life Insurance:

Let's discuss the different types of Life insurance in INDIA.

  1. Whole Life Insurance: A whole life insurance covers the policyholder (insured) for the entire lifetime. Sum assured is paid to the nominee on death of the policyholder. So, this policy is mainly bought to support the family after the death of the bread-earner in a family.

  2. Term Life Insurance: Term life insurance policy provides the coverage of death risk. A term life insurance is one of the simplest and affordable types of life insurance because the claim only paid if the policyholder's death occurred before the maturity of the policy.

  3. Endowment Plans: Endowment plan is a type of life insurance where the sum assured is paid to the nominee of the policyholder in case of death before maturity and maturity benefit paid in case of policyholder outlives the policy term. This is a mix of insurance coverage and investment.

  4. Unit Linked Insurance Plans (ULIPs): If you are interested in wealth creation, tax-saving, and insurance benefits this is the perfect plan for you. In ULIP, some part of the amount you paid as a premium invested on funds and the remaining amount on risk cover.


Written by: Kalpesh Agrawal


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