Types of Life Insurance Plans in India
A Life Insurance Policy is a shield for your life span, wherein the insurance company pays a certain sum of money either on the death of the insurer or after the completion of the policy. In India, there are a different types of life insurance plans. Before planning to buy one, you should be aware of all the types and their respective properties.
Types of Life Insurance
Broadly, there are 6 types of Life Insurance.
- Term Insurance
- Whole Life Insurance
- Endowment Plan
- Money Back Plan
- Annuities / Pension Plan
Let us understand each of them.
Term Insurance – it is a pure insurance product and not a saving or investment plan. For eg: if a person buys a term insurance of 1 crore, so in case of his/ her demise, the family gets Rs 1 crore from the insurance company. It has less premium and has more cover. Same premium lifetime.
Whole Life Insurance – It is same as term insurance but instead of some years, this life insurance provides a cover for full life span. It has lifetime benefits.
Endowment Plan – In this we get a savings option with insurance. There are 2 options – First, in case of demise of the policyholder, the family gets the sum assured. Second, if the policy holder is alive, he gets the sum assured + bonus. Less risk.
Money back plan – In this type, the policyholder gets some percentage of the sum assured every year. And, as and when the company declares a bonus, the policyholder gets that too. Good for the short term.
ULIP – It is a unit linked insurance plan. It has the benefits of both insurance and investment. You have the option to invest your premium in the debt market or equity market, at the time of buying the policy. It has a high premium, but when you choose to invest in equity, you can get better returns but it also depends on the choice of funds. In this you can get better returns in the long term as compared to other products.
Annuity / Pension plan – If you want to earn regular income in the form of pension, then this is a good product for you. In this you have to pay a one time lump sum premium amount, and then you can choose to get the pension monthly / quarterly / annually. You can plan your retirement using this plan.
To know which insurance is best for you, contact us.