Tax Saving Schemes Income Tax Act Section 80C Insurance products:
Classification based on benefits80 C insurance products can be broadly classified into three types based on the time at which the benefit from the insurance contract is available to the insured person or his nominee.
- Insurance providing ‘Death Cover’ : Benefit is paid on the death of the insured person within a specified period.
- Insurance providing ‘survival benefit’: Benefit being paid on the survival of the insured person beyond the tenure of the policy.
- Insurance covering both of the above: Benefit is paid at the end of the tenure of the insurance irrespective of the survival at the end of the specified period or death of the person during the tenure of the policy.
Life Insurance products: Coverage based ClassificationAnother way of classifying life insurance products could be the based on the type of cover that it offers:
- Term Insurance
- Whole Life
- Money Back
- Annuities and Pension
Term InsuranceThis is a 100 percent risk cover policy, whereby the sum assured is payable only if the policyholder dies within the policy term. There is no element of savings or investment. If the policyholder survives at the end of the term, then the insurance company keeps the entire premium paid by the policyholder. Thus, this type of insurance is ideal only to guard the family against the policyholder’s sudden death. This is why, term insurance comes at the lowest cost.
Types of Term Insurance
- Term Insurance Policy: Uniform risk cover throughout the selected period
- Decreasing Term Insurance Policy: Risk cover decreases at a predetermined rate over the life of the policy.It is usually taken to cover a mortgage, loan or any other type of debt.
- Increasing Term Insurance Policy:The benefit or risk cover increases increases each year of the term period.