The best insurance one can get for risk cover is Term Insurance. The biggest disadvantage of Term Insurance is that you dont get any money back at maturity, however that disadvantage is taken care by absolutely very low premium.
For Instance to take cover of 50 lacs, one has to shell out between Rs6000/- to Rs 15000 only. Premium varies from 1 insurance company to other and the difference can be substantial. Hence I suggest to do complete survey before signing up with any insurance company.
Term insurance is also the cheapest for of Insurance one can have. Actually this is a "No Frills Policy"
One has to usually go for medical checkup for this type of insurance as insurers are very particular about it. While it may be cheapest form of insurance for us, its the most risky proposition for the Life insurance company. One policy issued to wrong person resulting a claim can cost dear to the insurers and hence, they are really cautious when it come to issue of this policy.
As far as selling these policy is concerned, neither insurance companies nor the authorized agents are very keen to sell this type of policy. Commision passed on to sell this policy are really less as compared to ULIP's. and other Moneyback/Endowment plans. If you ask for this policy from your agent, they might not be very much interested to sell and the moment they come to know that you have money to buy a policy, they will Pitch hard to sell you ULIP's or traditional Money back/Endowment policies.
I guess no frills policy was for the savings a/c . A step initiated by RBI in order to ensure that every bank provide a a/c where no adb needs to be maintained. What is a no frills policy? What is the benifit of the same. Are any hidden charges ? Where can i find more dedtails on the same
No frills policy is not the technical name but any term insurance policy can be called no frills policy as it is a life insurance in purest form. Purpose of life insurance is to provide risk cover in the case of mishappenings. However all traditional policies are mix of both life insurance as well as investments.
However premiums of risk+insurance is very high and if you think that you can get higher returns by investing elsewhere(like stocks, mutual fund etc) then term insurance policies are very useful.
For instance to take a risk cover of 1 crore(Life insured for Rs 1 crore and in case of death Rs 1 crore is paid to nominee) you need to shell out premium ranging from Rs 13000 per annum to Rs 32000/- per annum which varies from 1 insurance company to another.
However if you are looking for any other traditional policy for the risk cover of 1 crore you will have to shell out atleast Rs 5 lacs per annum.
Howeverwhatever premium you pay in term insurance you dont get any return. Still I considered is better as it gives us the option to seperate insurance and investments.
just to add, this is the only policy where there are no hidden charges, and also you dont get any money back.
Ideally it should be taken by everyone but very useful for young people with more liabilities like home loan. This is a must take by person on whose income entire family is dependent.