A life insurance policy involves paying small sums called premiums on a monthly, quarterly or an annual basis to cover the risk of policyholder’s untimely demise during the tenure of the policy.
However, certain limitations and specific exclusions are often written/ mentioned in the contract that limits the liability of the insurer. These include claims relating to suicide, fraud, war, riot, and civil commotion.
There are broadly two types of life insurance policies. Protection policies, which are designed to provide a benefit, typically a lump sum payment, in the event of specified event. A common form of a protection policy design is investment policies. The main objective of this type of policies is to facilitate the growth of capital by regular or single premiums. These include endowment, moneyback, whole life and so on.
Watch this video to understand why you need life insurance.