A quick look at the different types of insurance plans
The benefits of life insurance are aplenty. However, there are different types of insurance plans, and each has its own advantages and policies. This article lists the different types of life insurance policies in India.
1. Term Life Insurance
Term insurance is the simplest type of life insurance plan. It is affordable to purchase and easy to buy. A term plan offers death risk cover for a specific period. In the case of the assured passing away during the policy tenure, the insurance company shells out the death benefit to the nominee.
2. Whole life insurance plan
Whole life insurance plans are similar to term plans and are known of their indefinite term. A whole life plan is also, in essence, pure protection plan. When you buy life insurance plans of this type, you don’t get a fixed tenure, as whole life plans run till the lifetime of the insured (or till the insured reaches 99/100 years of age).
3. Unit Linked Plans (ULIPs)
A popular option among insurance plans in India, a Unit Linked Plan is a comprehensive mix of investment and insurance. The premium paid for a ULIP plan is partly used as a risk cover (insurance) and partly invested into funds. Investment can be made in different funds offered by the insurance company, depending on the appetitive for risk.
4. Endowment plan
An endowment plan is a savings-cum-insurance plan that promises a death benefit in the case of death during the term, along with a maturity benefit if the insured services the term of the plan. The returns provided are usually very low (sometimes lower than FD in many cases), hardly enough to meet inflation. The insurance coverage is also low. Since it is a combination of investment and insurance, most of the premium will go towards investment and expenses related to the investment, rather than insurance.
5. Money Back Life Insurance
A money back plan is a unique insurance policy where a percentage of the sum assured is paid back to the insured at periodic intervals as survival benefit. Money back plans are also eligible for receiving the bonuses declared by the company from time-to-time.
6. Child insurance plan
Child plans are specifically designed insurance plans that create funds for the child’s marriage, education, etc. Therefore, a child insurance plan is a savings-cum-insurance plan which creates a guaranteed corpus for the child’s future and reduces dependence on the parents.
7. Retirement Plan
Retirement plans help build a corpus for retirement. They help the policyholder to be financially independent. Most of the retirement plans provide annual instalments or one-time payout after the age of 60. In case of an unfortunate event that the life assured passes away during the policy term, immediate payment is payable to the nominee by the insurance company.
Now that you know the different types of life insurance plans in the market, you just need to stay away from the ones that don’t suit you and go for the one that best meets your needs. ULIP plan, life insurance plans
