Types of Life Insurance Policies
In India, choosing the right type of life insurance is one of the most crucial financial decisions, as it helps you protect those you dear from the uncertainties of life. In spite of this, many people are unaware of the types of life insurance policies in India and how they can affect their finances. Check out the various types of life insurance and their benefits below.
Different Types of Life Insurance Policies in India
The following types of life insurance are available in India:
- Term insurance
- Term insurance with return of premium
- Unit Linked Insurance Plans
- Endowment plans
- Moneyback policy
- Whole life insurance
- Group life insurance
- Child Insurance Plans
- Retirement Plans
Let’s take a look at these categories in more detail to learn how you can choose your life insurance policy in India.
1. Term Insurance Plan
Term insurance plans are one of the most popular types of life insurance policies in India. This is a type of life insurance policy you can buy in India that covers you for a specific period of 10, 20, 30 or more years, hence the name.
Term life insurance does not offer maturity benefits, unlike some other types of life insurance. As a result, term insurance is comparatively cheaper than other types of life insurance in India.
There is no saving component to term insurance, unlike other types of life insurance. It is also possible to buy a significant life insurance policy at a lower premium compared to other types of life insurance policies that are more expensive but have built-in saving components.
2. Term Insurance with Return of Premium
It is one of the types of life insurance policies that provide a death benefit without a maturity benefit.
In addition, if you live a healthy lifestyle, you will probably outlive the best insurance policy you have purchased. There are many life insurance types in India, but a term insurance policy with return of premium is one of the best because it offers maturity benefits as well.
It is one of the types of term insurance plans that refund your premiums if you survive the policy period. Moreover, you can calculate term insurance premiums using an online term insurance calculator.
A term insurance premium calculator lets you determine your unique requirements, choose your policy term, and explore rider options. By doing so, you can ensure that you are investing in the most suitable life insurance policies for you and your family.
You might opt for whole life insurance if you have long-term life goals, but the factors to consider here are different. Consider your age and personal needs when choosing a life insurance policy.
3. Unit Linked Insurance Plan (ULIP)
There will come a time in life when you have to choose between investment and insurance.
The ULIP is one of the types of life insurance policies in India that fulfils both of these aspects. Among the various types of life insurance, this is the only one that offers investment opportunities along with life insurance. In addition, it has a five-year lock-in period, making it a long-term investment instrument that offers protection against risks. The market dynamics can also be taken into account when you invest in ULIPs.
4. Endowment Policy
An Endowment Policy is one of the types of life insurance policies that combines life insurance and savings benefits. Aside from giving you life insurance, these types of policies allow you to save money regularly over a period to get a lump sum at maturity.
It is their ability to help fulfill long-term goals in life that makes them one of the most valuable types of life insurance policies. If you survive the policy tenure, you will also receive the maturity amount.
Being one of the most appropriate types of life insurance plans, an endowment policy also assists your family in meeting various financial objectives.
5. Moneyback Policy
Investment in insurance policies in India can help to create wealth over an extended period of time for you and your family. Nevertheless, most types of life insurance do not provide any way for a beneficiary to receive funds before their tenure ends. This is where a moneyback policy is crucial to solving the problem of liquidity.
A moneyback policy is a type of life insurance policy in India that gives regular cash back.
A percentage of the assured sum is paid throughout the policy term, as opposed to other types of life insurance, which do not offer returns until the policy matures.
6. Whole Life Insurance
Depending on the type of life insurance policy you have chosen, you receive different benefits. The main difference between a whole life insurance policy and other types of life insurance is that it provides insurance coverage to the insured up to the age of 100.
According to whole life insurance policies, the death benefit is paid to the beneficiary in the event of the untimely demise of the policyholder. If, however, you cross 100 years of age, you can receive a maturity benefit under a whole life insurance policy.
Another notable feature of such whole life insurance plans is the option to pay premiums for 10–15 years while you receive the benefits throughout your life.
7. Group Life Insurance
Group life insurance, like group health insurance, provides coverage for a number of people through one master policy. These types of policies are usually offered as part of an employee benefit package.
Unlike other forms of life insurance, these types of products provide insurance coverage only if you remain part of the group. Unlike individual life insurance plans, in which coverage continues throughout the policy term, this type of plan does not provide coverage throughout the entire period.
8. Child Insurance Plans
The child plan is a life insurance plan that includes both a savings and insurance component that can help you meet your child’s financial needs. The right child insurance plan can help you build wealth for your child’s future needs, such as education.
You can start investing in these plans as soon as your child is born. You can invest your hard earned money into several funds according to your financial situation and goals.
9. Retirement Plans
The retirement plan is one of the types of life insurance policies that helps you create wealth after retirement and provides financial security. With the Retirement Plan, you will be paid a sum of money as a pension when you reach retirement age.
If you were to die during the term of your policy, your nominee would receive the death benefits. Your retirement plan comes with a death benefit as well as vesting benefits, so you and your family are protected.
