Investing in an insurance policy through any insurance company is the way to create financial stability to cover the uncertainty of the future for the insured and his/her family.
A guaranteed benefit in insurance (especially in the case of life insurance) policy is that the investment will grow as shown and the insured person will get a pre-stated amount on the invested amount as described in the benefit illustration. Moreover, if the policy offers guaranteed benefits, then that should be clearly marked in the policy document or in the benefit illustration table as ‘guaranteed’
When a customer applies for a guaranteed or non-guaranteed insurance policy, he/she receives an insurance illustration with the policy. The illustration/document describes the cash value component, cost of insurance, and the age up to which the insurance policy will be applicable. The guaranteed benefit illustration also describes how returns on the money invested in the policy will be calculated and how that will be paid. The policy contains the projected investment rate of return mentioned in the benefit illustration that can be guaranteed or non-guaranteed. So the insured should take care of all points mentioned in the document.
Overall, there are many life insurance coverage schemes offered by various insurance companies. Basically, there are two particular schemes available for customers.
- Guaranteed life Insurance
- Non-guaranteed life insurance
Most of the life insurance policies can be taken to coverage, say up to 85-100. The insured/customer can customize the scheme to pay premiums across the policy tenure or within a shorter period and the insurance policy illustration is always given to a client.
One of the main motives for taking a life insurance policy is to cover the financial risks associated with the insured individual’s death. But there are also some other concerning factors like the guaranteed premium amounts and non-guaranteed premiums. One has to choose the policy based on what suits them best and it depends on the buyer’s financial situation, health conditions, income, dependents, etc.
Guaranteed life insurance policy?
Guaranteed life insurance ensures continuity of the insurance cover if the insured pays the premium regularly without deviation. This ensures the life insurance scheme will be intact till the insured is paying the premium. A distinctive benefit of the guaranteed life insurance policy is that the premium amount of such plans remains the same throughout, even if the insurance company increases the fees and other charges during the policy term.
A guaranteed life insurance policy ensures that the insured person will receive a guaranteed rate of return on his/her investment. This means that the investment made by the customer(insured) will grow as described, and the insured will receive the invested amount as stated in the benefit illustration. Also, if the life insurance policy offers guaranteed benefits to the insured, it will be clearly marked as ‘guaranteed’ in the benefit illustration table.
Non-guaranteed life insurance policy
In a non-guaranteed policy, the premium amount is unpredictable and that could fluctuate also. This means if you buy a non-guaranteed life insurance policy, the amount of premium for the first couple of years of the policy could change (mostly increase) later according to the calculations based on the current market scenarios. Hence, the premium amount for a non-guaranteed life insurance policy may not remain the same throughout the policy tenure.