2. Policies of life insurance on the basis of premium payment: Under this basis, policies can be classified into two ways.
I. Single premium policy:
Under this policy, the whole premium is paid at the beginning of the policy As compared to the annual premium payable, it i & costlier, but as compared to aggregate of all annual payment, it is much smaller because insurer can earn additional income on the premium received
II. Level premium policy:
Under this policy, regular and equal premiums are paid at a definite interval This premium is lesser than the single premium and is convenient to make premium at a regular period.
3. On the basis of participation in profit:
According to this basis, policies can be classified into two ways
- Without profit policies / Non-participatory policies: Under this policy, the policy holders are not entitled to share the profits of the insurer
- With profit / participatory policies: Under this policy, the policy holders are entitled to share the profit of the insurer they cannot be treated as a co-owner of the insurance business.
4. On the basis of number of persons insured:
Under this basis also policies can be divided into two parts.
- Single life policies: Under this policy, only one individual is insured and the policy amount is payable only when the assured event occurs
- Multiple life policies: That policy in which more than one life insured is called multiple life policy This can also be divided into joint life policy and last survivor policy Joint policy covers two or more than two lives and policy amount is payable on the first death Under last survivor policy, the policy amount is payable at the last death So long as any one of the insured is alive, no payment is made
5. On the basis of the method of payment of policy amount:
This can also be divided into two parts
- Lump sum policies: It the sum assured paid in lump sum at the event insured occurred it is lump sum policy.
- Installment or annuity policies: Under this policy, amount is payable in installment basis This is more beneficial to those whose earning capacities are reduced to minimum in old age