Different Types Of Life Insurance Policies In India
What Is Life Insurance In India, Types Of Life Insurance In India, Why is life insurance important, Types Of Life Insurance Policies In India
A life Insurance Policy is a policy that protects your family when something happens to the head of the family(insurer). An Insurance Policy is a contract between the policy owner (you) and the insurer (the life insurance company), which assures the paying out of a sum of money in the event of the policy holder’s death, or terminal or critical illness.
The insurer(the life insurance company) promises to pay a fixed sum of money at the time of the death of insured or on the expiry of a specified period of time, whichever is earlier.
Life insurance can provide security, protect policy owner Family and facilitate other retirement savings.
Different Types Of Life Insurance Policy In India
There are a variety of policies available in the market, ranging from Term Endowment and Whole Life Insurance, to Money Back Policies, ULIPs, and Pension plans. Let’s see what each of these is about, so that you can consider the one that best suits you.
Endowment Insurance Policies-Traditional Insurance Policies
This policy is taken for a specific period known as ‘endowment period’. The sum assured is payable either on the death of life assured or on the expiry of a fixed period. If the person does not die upto the maturity of the policy, he shall get back the insured amount after the maturity of life policy. It is the most popular form of life insurance.
Term Insurance Policies
Term plans are the most basic form of life insurance. They provide life cover with no savings / profits. If the insurer dies the insurance amount, called the Sum Assured, is paid out to the nominees. If the insurer survive, you don’t get anything and lose all the premiums you paid.
Unit-linked Investment Policies (ULIP)
ULIPs or Unit Linked Insurance Plans differ from traditional endowment plans in certain areas. ULIP is linked to markets. certain part of your premium is invested in bonds, equities or debt funds and the remaining amount is used for life coverage.
However if you are applying for this plan then you should be ready for the risks related to stock market.
Whole Life Insurance policy
Whole-life plans provide cover throughout your life. Usually, the policyholder is given an option to pay premiums till a certain age or a specified period (called maturity age). On reaching the maturity age, the policyholder has the option to continue the cover till death without paying any premium or en-cashing the sum assured and bonuses.
Primary advantages of Whole Life Insurance are guaranteed death benefits, guaranteed cash values, and fixed and known annual premiums.
Money back Insurance policy
This is a variant of the endowment plan. It gives periodic payments over the policy term. To that end, a portion of the sum assured is paid out at regular intervals. If the policy holder survives the term, he gets the balance sum assured.In case of death over the policy term, the beneficiary gets the full sum assured.
Pension policies let individuals determine a fixed stream of income post retirement. This basically is a retirement planning investment scheme where the sum assured or the monthly pay-out after retirement entirely depends on the capital invested, the investment time frame, and the age at which one wishes to retire. There are again several types of pension plans that cater to different investment needs.