Features and Benefits of Different Types of Life Insurance Plans

A policy that covers the danger of early death is known as life insurance. According to the plan, the insurance provider guarantees to pay a death benefit if the life assured passes away during the policy's term. Life insurance policies are legal agreements in which you are required to pay a premium in exchange for the coverage provided by the insurance provider. Furthermore, many life insurance plans cover survival till the completion of the policy term, at which point a maturity benefit is paid. The following article aims to elaborate on such different types of life insurance policies.

Types of Life Insurance Plans

In India, there are several types of life insurance plans that are accessible to the public.

1. Term Insurance Policy

The most basic kind of life insurance policy is term insurance. Term plans are the most affordable type of life insurance and provide unrivalled financial protection. The policy guarantees a death benefit for the duration of the policy. However, no maturity benefits are paid when the policy matures. This is why term plans provide high levels of coverage at a cheap cost. Moreover, coverage can be purchased for very long periods, up to 30 or 35 years or until the age of 85 years. There are a variety of options available depending on the policy plan. There are several kinds of term insurance plans like level term plans, decreasing term plans, increasing term plans, convertible term plans, term plans with return of premium option (TROP) etc.

2. Whole Term Life insurance Plans

Whole life insurance plans, as the name implies, cover you for the rest of your life, up to the age of 99 or 100. These policies are similar to term insurance, except they provide coverage for an extended amount of time. In addition, the cash value component of the policy rises over time and can be cashed at any time, even to take out a loan. The death benefit will be lowered if the life assured passes away before the loan is repaid.

3. Endowment Plan

Traditional savings-oriented life insurance policies are known as endowment plans. These policies cover you in the event of premature death. Furthermore, a guaranteed maturity bonus is promised upon maturity. As a result, endowment plans offer both insurance and savings. The term of coverage might range from 10 to 30 years. Moreover, the endowment plans can be divided into two plans - a participating plan that offers a bonus and a non-participating plan that does not provide bonuses.

4. Money Back Insurance Policy

Money-back plans are also known as anticipated endowment plans since they are similar to endowment plans but have benefits that are expected in the future. In these plans, the sum assured is paid in segments over the policy term at predetermined intervals. This enables liquidity while also giving life insurance protection. Money-back benefits are referred to as "survival benefits" for this reason. Furthermore, money-back policies are available as participating plans with bonuses. If the life assured's death, the entire sum assured is paid, regardless of the survival benefits already paid.

5. Unit Linked Term Insurance Policy

Unit linked insurance plans are one-of-a-kind life insurance plans that offer both insurance and investment benefits. These plans' premiums are invested in market-linked funds. This fund then grows as per the market's performance. A death benefit is given if the insured dies during the policy's term. Moreover, the fund value, equal to the premiums invested plus the profits achieved over the policy's duration, is paid upon maturity. Different types of investment funds are available to meet various risk appetites. You have the option of selecting the premium you would like to pay, the investment fund, and the plan's tenure. Furthermore, the provision of switching allows you to change the investment fund you've chosen.

6. Child Insurance Plan

Child insurance policies are life insurance policies designed to protect your child's future. There is a premium waiver rider included in some plans. If a parent who is also a policyholder dies, this rider waives the premiums. Even if the premiums are waived, the coverage continues and pays a reward when the child needs it for higher studies or marriage after the term ends. Therefore, whether the parent is alive or not, child insurance policies provide a fund for the child's future. Traditional endowment, money back, and unit-linked plans are all options for children's plans. However, the policy is only available to parents of minor children.

Take Away

In the event of unforeseen circumstances, a life insurance policy proves to be a financial weapon. While you may not be able to avoid the difficulties that life throws your way, you can certainly cover the risks you face and ensure that your loved ones have a secure financial future. Hence, invest in a good life insurance policy to ensure the happiness of your family.

Also read - Know All About Different Types of Term Insurance Plans

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.