Understanding Different Types of Life Insurance Policies Available in India
Updated On Sep 04, 2021
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Buying life insurance is an important decision. If you are planning to buy a life insurance policy, it is recommended that you develop an understanding of the different life insurance policy types available. Having a clear understanding of the types of life insurance plans available in India will help you make an informed decision and avoid inconvenience in the later stages of life.
Different Life Insurance Policy Types Available in India
The list includes:
1. Term Insurance - Term insurance policy is one of the most sought-after life insurance policies in India. Term insurance can be purchased for a specific period such as 10, 20, 30 or more years. It is important to note that term insurance does not offer maturity benefits. Moreover, term insurance is a pure protection plan and does not comprise a saving component.
2. Money Back Insurance - One of the common concerns with life insurance policies is that most do not come with the provision of providing funds before the end of policy tenure. However, money back policies resolve this issue by providing liquidity. True to their name, money back policies give money back on a regular basis. Money back policies pay a percentage of the sum assured throughout the policy tenure unlike other life insurance policy types that do not offer returns till maturity.
3. Retirement Insurance - Retirement insurance is the life insurance policy type that not only provides financial security, but also helps with wealth creation post retirement. Under retirement plans, a policyholder gets a specific sum of money in the form of pension in the vesting period. However, in case the policyholder dies, their nominee gets the death benefits.
4. Endowment Insurance - Endowment insurance is one of the life insurance policy types that provides the dual benefit of insurance as well as savings. While life cover is one of the key benefits of endowment policies, another key aspect of the policy type is that it helps you save money regularly over a period so that you can get a lump sum at maturity. Highly beneficial in fulfilling life goals, endowment policies provide the maturity amount even if the policyholder survives the policy tenure.
5. Child Insurance - One of the most crucial life insurance policy types, child insurance is the investment+insurance plan that helps you fulfill the financial requirements of your child. What’s best about child insurance is that it helps in creating wealth for your child’s education, higher studies and various future needs like such. It is advised to invest in child plans right from the birth of your child.
6. Unit Linked Insurance Plan (ULIP) - If you have been worried about choosing insurance or investment, opting for a ULIP or unit linked insurance plan would be better. Your ULIP will be your significant long-term investment instrument encapsulating risk protection due to the lock-in period of five years. Note that your ULIP will also allow you to balance your funds according to the market dynamics.
Now that you have a clear idea of the life insurance policy types available in India, go ahead and choose the perfect one for you right away!
You may also like to read - Things to Know Before Filing a Death Claim
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.