Imagine a low-risk investment that has the potential to grow your savings, create wealth, help you achieve long term goals, and secure you financially for decades! Life insurance can do all this for you and there are different types of life insurance plans that offer you higher returns for your investment.
What are the different types of life insurance policies in India?
There are 7 types of life insurance policies, which can be chosen based on your goals and requirements.
1. Term plan: The simplicity and affordability of term insurance makes it one of the most popular types of life insurance policy. You get a high coverage at a low premium. Your dependents get the entire sum assured (coverage amount) tax-free as death benefit, in case of your unexpected demise during the policy term. There is no pay-out if the policyholder survives the term, but you can purchase additional covers that protect you from critical illness, death or disability by accident, and even return the premium you have paid.
2. Endowment plan: If you want a simple Savings Plan with financial security, this is one of the ideal types of life insurance policy. Endowment plans offer a death benefit, in case of the policyholder’s unexpected demise and a lumpsum amount when the policy matures. The returns may be fully or partially guaranteed depending on your needs.
3. ULIP (Unit Linked Insurance Plan): ULIP gives you the double benefit of investment and insurance. These types of life insurance products are preferred by people who want to grow wealth through market-linked returns. ULIP offers customisation and flexibility. You can invest in equities, debt funds, bonds, hybrid funds or other fund options. You can mitigate market risks by switching between funds or partial withdrawal.
4. Money Back plan: This is one of the safest types of life insurance policies in India, to grow your savings. The plan pays back a percentage of the sum assured at regular intervals. You can reinvest this amount to earn more returns or utilise it to fulfil an immediate goal. The entire death benefit is paid as lumpsum if the policyholder passes away during the term.
5. Retirement or Pension plan: These types of life insurance policy ensure a comfortable, post-retirement life when there is no income. Starting the plan when employed will help you build a sizeable corpus. You can claim your money as a monthly regular income or lumpsum payment. The plan offers the sum assured as a death benefit.
6. Whole Life plan: Of the different types of life insurance, this is the only plan that covers you for the longest duration, i.e., up to 99 years of age. These types of life insurance are ideal for those with dependents in their old age.
7. Child plan: This is the one of the most important types of life insurance plan to build a corpus to fulfil your child’s future goals. These plans offer features to ensure that your child receives the corpus you planned for even in your absence.
FAQs
How many different types of life insurance companies are there?
There are 22 life insurance companies.
What type of life insurance is right for me?
Choosing the right life insurance will depend on your future goals, how much coverage you want, as well as the premium you can afford.
What is the least expensive type of life insurance?
Term insurance is the most affordable life insurance.
What types of death does life insurance cover?
Life insurance covers death by natural causes and accidental death. Suicide is not covered.
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