Life Insurance


Loss of a life cannot be compensated for and this is the basis of Life Insurance products. Other products such as medical insurance would reimburse an individual for an expense incurred by the respective person in case of medical mishap. However, the value of life of a person cannot be reimbursed and hence all Life Insurance products work upon the basis of paying an amount (also known as sum assured) in an unfortunate incident of death based upon an initial agreement between the insurer and the insured person. The amount of premium paid by the insured depends upon various factors such age, existing medical ailments, lifestyle of the insured, duration and amount of insurance. If the amount of insurance requested by the insured is over a material amount, the insurance provider may require a medical checkup before entering into an agreement with the insured.

Amongst the types of life insurance products available in the financial market, the most popular options are Term Insurance and Endowment Policy.

In Term Insurance policy, the insured person pays a regular insurance premium for the duration of the insurance policy and if the insured dies during the tenure of the policy, the lump sum amount / sum assured is paid to the nominee / legal heir of the insured. If such an event does not arise with the policy term, no amount is paid by the insurance company to the insured.

In case of Endowment Policy, similar to term insurance, the insured person pays a regular insurance premium for the duration of the insurance policy. During this duration, the insured person is covered if a death event occurs, whereby the sum assured amount is paid by the insurance company to the nominee or the legal heir of the insured person. However, if no such event arises, the insured person is paid the sum assured after the expiry of the policy tenure. Several flavors of endowment policies exist where such sum assured is paid throughout the policy duration (in case of money back policies), or where the insured pays insurance premiums for a specific duration only and gets a life cover for an extended period of time. Other policies invest a portion of insurance premiums in stock markets and aim to generate higher return and hence a higher maturity payout (in case of Unit Linked Insurance Plans). In summary Endowment Policy plans serve dual purpose of providing insurance and acting as an investment option in the same time.

In the maze of several types of insurance products available through scores of insurance companies, BFA assist their clients to obtain the right product to suit their requirements.

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