Hurry Up!Guide: Know About Different Types of Life Insurance Plans
Updated On Apr 23, 2021
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Talking about financial planning, individuals today are presented with a variety of options. While doing so, the majority of individuals focus on the wealth creation aspect ignoring the protection element. Owing to the rise in inflation, changes in the lifestyle trend, and shifting to nuclear families, when it comes to financial planning, life insurance should be given first preference.
Types of Life Insurance
Listed below are the type of insurance plans offered by various insurance providers in India:
1. Endowment Policy
An endowment plan is a kind of life insurance policy that offers an individual the combined benefits of savings and life insurance. Alongside offering the life cover, these insurance plans help the policyholder in saving their money routinely over a fixed time duration to receive the lump sum amount at the maturity of the policy. These plans are also commonly referred to as traditional life insurance, although it has an element of investment yet it has lower risks in comparison to other investment options and also the returns received are lower here.
Ideal Option for: For individuals who want to go for long term savings and have lower risk appetite
2. Term Life Insurance
Term life insurance plan is one of the most popular life insurance plans that is bought by the public in India. It is a kind of life insurance plan that can be bought for a specific tenure of 10,20,30 years and so on. There are certain types of life insurance plans that provide maturity benefits while the term insurance plans do not offer any such kinds of benefits. This is one of the prime reasons as to why term insurance plans are cheaper in comparison to other kinds of life insurance plans.
Ideal Option for: Individuals who desire high sum assured but at a lower premium
3. Unit Linked Insurance Plan
While doing financial planning, you’ll find yourself on crossroads regarding whether to choose insurance or investment. A United linked insurance plan( ULIP) is a kind of life insurance plan in India that meets both these criterias. Amongst various kinds of life insurance, this plan provides a combination of life cover with investment opportunities. This policy has a 5 years lock-in-period, that makes it a long term investment instrument which is available with risk protection.
Ideal Option for: Individuals looking for long term investment while having more flexibility to invest
4. Moneyback Life Insurance Policy
A unique kind of life insurance plan, wherein a specific sum assured percentage is paid back to the policyholder on regular intervals as survival benefit. These plans are held eligible for receiving the bonuses that are declared by the company every now and then. Hence, thereby a policyholder can easily meet their short term goals as well.
Ideal Option for: Individuals who want to invest in short term investment options to get short term financial objectives.
5. Whole Life Insurance
This type of life insurance plan offers protection or life assured for the entire life, or in some cases, up to 100 years of age. Whole life insurance plans are not like term plans which are offered just for a specific duration. The coverage of the policy or sum assured is decided during policy purchase and the beneficiary is paid during death claim of life assured alongside the bonuses. However, in situations when the life assured lives beyond 100 years of age, the matured endowment coverage is paid by the insurance provided to the insured person.
Ideal Option for: Individuals looking for life coverage for entire life
6. Child Life Insurance Policy
A type of insurance plans that helps in meeting the investment and financial needs of the child. This insurance plan will assist you in creating wealth for the future requirements of your child like education etc. An individual can choose to invest in a child life insurance plan right from the birth of their child. Most of such plans offer annual installments post 18 years of age.
Ideal Option for: For an individual who is seeking to build funds for the future of their child
7. Retirement Plans
These are the kind of insurance plans that offer financial security and assist you in creation of wealth post your retirement. With this kind of plan, the insured will receive lump sum money as pension during the vesting period. If the insured passes away during the policy tenure, the beneficiary would receive death benefits.
Ideal Option for: Individuals to build corpus for retirement
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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.
