Guarantee and options

There are many kinds of life insurance policies available in the market. One commonality is they
all cover financial risks associated with death of the policy holder. But there are other
distinguishing factors such as guaranteed premium amount and a non-guaranteed premium that
you must consider to best suit your needs for this you must take into account your financial needs.
the number of dependents or family members, your health status income and other related aspects.

Guaranteed life insurance policy: -

A guaranteed life insurance policy guarantees continuity of the cover as long as the insured
individual is flawlessly regular with timely payment of premium. This means the policy will not
lapse until a premium payment is missed. A distinctive benefit this policy offers is that the
premium amount will remain the same throughout- even if the insurer raises its fees and other
charges during the policy term.

Non-guaranteed life insurance policy: -

A non-guaranteed life insurance is a limited term insurance policy where the premium amount
remains unpredictable. That means the premium amount you start to pay in the first few years of
the policy may Hike up based on the based-on calculation in line with market scenarios. therefore,
the premium amount is not guaranteed to remain same throughout the policy tenure for example if
the procure a non-guarantee insurance policy for 10 years, you may be paying a fixed premium
amount for the first five years, for the next five years, you may have to pay higher premium.

Settlement options: -Under a settlement option, the maturity amount entitled to a life insurance
policyholder is paid in structured periodic installments (up to a certain stipulated period of time
post maturity) instead of a 'lump-sum' payout. Such a payout needs to be intimated to the insurer
in advance by the insured. The primary objective of settlement option is to generate regular streams
of income for the insured. Under settlement option, the insured receives a regular flow of income
from the insurer post the maturity of the policy. An annuity or a pension is type of settlement
option where the insured gets regular stream of income after the completion of the maturity period
when the insured reaches the vesting age.
The four most common alternative settlement approaches are: the interest option, under which the
insurer holds the proceeds and pays interest to the beneficiary until such time as the beneficiary
withdraws the principal; the fixed period option, under which the future value of the proceeds is
calculated and paid in installments for a specified number of years; the fixed amount option, under
which a fixed dollar amount is paid in periodic installments until such time as the principal and
interest are exhausted; and the life income option, under which a stipulated amount is paid
periodically to the beneficiary throughout his or her life.