Life insurance policy’s classifications based on the method of claims payment

We know that there are many classes of life insurance policies. On the basis of method of claims payment, there are mainly two classes. They are explained in the given below:

1. Lump sum policy: In these kinds of life insurance policies, the insured money will be paid in full amount from an insurer to the policy holder after the end of the time of the policy or also be paid to his selected insured or nominee named in the contract paper after his death if occurs. In general sayings, the policy of life insurance means these kinds of lump sum policies. In accordance to both a whole life policy and a term policy, the insured money will be paid in full amount to the selected insured or named nominee in the policy, if the policy holder is died during the time of the taken life insurance policy. On the other hand, in an endowment policy, the insured money will be paid to the policy holder or his selected insured or nominee in full amount from the life insurance company in both of the causes of death of that policy holder during the time of the policy and also after the end of the time of the policy when he is alive.

2. Installment or annuity policy: In these kinds of life insurance policies, there is no need of payment of insured money altogether in an only installment. In accordance to the rules written in the contract paper of the policy, after the claims grows, the life insurance company will be responsible to pay the insured money as installments or annuities within a certain frequent time to the policy holder. To get protection and financial safety due to the retirement from the job and also from the age related helpless condition, this life insurance policy of installment or annuity policy gives an effective opportunity to the people.

In conclusion, we can say that, though there are different methods of claiming payments but the life insurance policies are very important to our life.