If you are thinking of purchasing a life insurance policy, then you must be very much confused with the different types of life insurance policies available in the market. From the past few years, the insurance sector has become one of the most competitive industries, as insurance providers are coming up with different types of life insurance policies with various benefits and features to cater the changing needs of the customers. So, here we have listed the different types of life insurance policies available in India to give you clarity in various plans.
Whole Life Insurance – Though it offers life insurance coverage for the entire life, but it is not very much flexible and has its own limitations. Its biggest limitation is huge premiums on similar death benefits as compared to Term Life Insurance. The premiums under whole life insurance are 10x costlier than a term life insurance policy. So, if you are planning to buy whole life insurance for investment purpose, then it is not the best option to invest your hard earn money in, because the return on investment is relatively low.
Term Life insurance – It is one of the simplest forms of life insurance policy you will ever come across. You get the best of the benefits in term life insurance starting from flexibility, renewability, riders, lowest premiums, and a lot more. Here, the beneficiary of the policy receives the sum assured or the death benefit amount upon the death of the policyholder within the tenure of the policy.
Before going any further, let us discuss the types of term life polices first:
Term Life Insurance has been categorised broadly in mentioned categories:
- Decreasing Term Life Insurance
- Level Term Life insurance
- Return of Premium Plans
- Increasing Term Plans
- Convertible Term Plan
- Term Plan with Riders
And you can choose the one that best suits your requirements.
Unit linked insurance plan (ULIP): ULIP offers you triple benefits in the form of insurance, tax-saving option and building wealth. Under ULIPs the amount that is paid towards premium payment is partly invested on the risk cover and funds. You get the opportunity to select the funds to invest based on your risk appetite and investment prospects. To calculate the amount of fund that you need to invest based on the frequency of amount, tenure, and investment, you can use a ULIP calculator.
Endowment plans: This form of life insurance policy is similar to ULIPs, as it offers a combination of insurance and investment opportunity. In case of the policyholder’s demise, the nominee receives the sum assured amount. In contrast, if the insured outlives the policy tenure, then he or she receives the sum assured along with the accumulated bonus.
Money-back policy: In money-back policy, the policyholder receives a certain amount in specific intervals during the tenure of the policy as well as the sum assured amount in case of the policy maturity or on the death of the insured. Investors also receive accumulated bonuses on maturity under this plan.
Child plan: A child insurance policy helps to accumulate funds for child’s important milestones such as higher education, overseas education, marriage etc. Most of the child plans offer one-time pay-out or pay annually after the child reaches 18 years of age. In case the child’s parents pass away within the policy tenure, payment is made to the guardian or the child. Some insurance providers even waive off the premiums if the policyholder dies during the policy term and the make the payment after the period of maturity.
Retirement plan: As the name suggests, a retirement insurance plan helps to collect substantial funds for stress-free retirement life. You can either opt for a single pay-out or annual payments after the 60 years of age. In case of the policyholder’s demise, the payment is made to the policy nominee based on the insurance coverage, fund value or 105 percent premiums paid.
Needless to mention that there are different types of life insurance policies available, but while choosing one, you should focus on your needs. You can modify your policy as per your requirement, such as you can add riders for additional benefits like critical illness coverage. For instance, if your family has a history of a critical illness like heart diseases etc. then you can add on a rider with a minimal charge and enjoy the benefit of it in the long run.
For any assistance related to different types of life insurance policies, you can visit BimaKaro.in and get the best quotations as per your choice.