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Types of Life Insurance - Best Life Insurance Policy in India
What are the major Types of Life Insurance Policies in India?
Purchase the Best Life Insurance Plan Online
For a comfortable, hassle-free life choosing the right type of life insurance policy is top most important requirements. A life insurance policy guarantee that one’s dependents will be well looked after even if they are no longer around in addition to it it can also contribute to future financial goals.
In India, no doubt, there are different types of life insurance policies. One can choose a life insurance plan depending on their unique individual requirements. Below is an article to learn about different types of life insurance and their benefits in India.
Major Types of Life Insurance Policies in India
Below are listed the various types of life insurance policies in India;
1. What is Term Life Insurance or Term Plan India?
Term life insurance is the most popular type of life insurance in India. It is widely thought to be the simplest and purest form of life insurance. If the policyholder dies during the policy term, it offers a death benefit to the beneficiaries of the policy. Term insurance is the most affordable and reliable types of life insurance. The best feature of this plan is the high amount of coverage which is offered at extremely nominal premium rates. It is thus relatively cheap and more reliable than other types of life insurance policies.
Term life insurance does not offer maturity benefits In general. But there are certain types of term plans also that offer maturity benefits such as term plan with return of premiums (TROP) if the policyholder outlives the policy term. By opting for additional riders, such as Accidental Death Benefit or Child Support riders, one can also increase the amount of coverage offered by a term plan.
2. What is whole Life Insurance Plan?
An offer of an insurance policy covering right until the death of the policyholder is known as whole life insurance. You can opt for either a participating or non-participating policy In this policy based on your financial needs and risk requirements. Dividends are paid out at regular intervals to the policyholders though the premiums for participating whole life insurance are higher. Though the premium rates for a non-participating policy are lower, the policyholder generally cannot avail the benefits of regular dividends.
Read more about - Whole Life Insurance.
3. What is Unit Linked Insurance Plan (ULIP)?
Dual benefits of investment and life insurance is known as Unit Linked Insurance Plan or ULIP. This is a type of life insurance product that offers Among the different types of life insurance policies available. Owing to their versatile nature ULIPs enjoy a high amount of popularity. A portion of the premiums paid is directed towards ensuring insurance coverage and the rest of the premium is invested into a bouquet of investment instruments including market-backed equity funds, debt funds and other securities.
As investors can easily switch or redirect their premiums between the different funds available, ULIPs are thought to be extremely flexible instruments. In terms of tax-saving benefits, they are also touted as having an edge over other market instruments because their proceeds are exempted from LTCG (Long Term Capital Gains).
4. What is Endowment Policy?
Endowment Policy is both an instrument for insurance and saving. The aim of these plans is to provide maturity benefits to the life insured, as a lump sum payment at the end of the policy tenure, nevertheless a claim has not been made. It is the most suitable type of life insurance for those people who are looking for a maximum coverage along with a sizable savings component. They help the policyholder grow the habit of savings as well as provide financial security to their family. Endowment plans can mainly be divided into two types: with profit and without profit. Policyholders can choose from these two types of plans based on their risk appetite.
5. What is Money Back Policy?
One of the best types of life insurance policies is a money-back policy that offers policyholders a percentage of the total sum assured at periodic intervals given in the form of Survival Benefits. The time the policy reaches its maturity, the remaining amount of the Sum Assured is handed over to the policyholder. But in case the policyholder dies while the term is continuing, their beneficiaries are given the entire Sum Assured without any deductions.
Read more about - Money Back Plans.
6. What is Retirement Plan?
If you are looking for a type of insurance which provides financial stability and security post your retirement, Retirement Plan is that type of life insurance. You lose your regular income from employment after you retire. Investing in retirement plans can help you maintain a stable regular income stream. It depends on your continuation of invest until retirement, if done so, the plan will help you take care of your expenses after your retirement. You only have to invest a certain part of your income regularly during your working life. The time you retire, the amount that you created over the years will be converted into a regular income stream. Retirement plans in addition involve death benefits. Thus, if the policyholder dies during the period of the policy, their beneficiaries will be provided with an assured sum.
7. What is Child Insurance?
A child insurance plan is a kind of savings cum investment plan. This insurance provides financial protection for the child’s future in case there is the unfortunate demise of the policyholder. To ensuring the future needs of the child are well taken care of in the absence of the life insured it is an ideal insurance . In order to meet the financial requirements for their child’s education, marriage or fulfilment of a multitude of other financial goals their child might have, Parents can invest in the best child insurance plans.
8. What is Group Insurance Plan?
A group life insurance policy is such type of life insurance that covers a group of people inside a single insurance policy. This is not like individual life insurance policies which cover one person for a period. This group insurance covers a minimum of 10 members. Group of persons like employers, persons of corporates, banks and other homogeneous groups of persons can purchase group Life Insurance policies for their employees and customers. The aim of the group of persons differs; employers would want to offer financial protection to their employees', families banks and lending institutions aim to keep the debt off the borrowers’ family after their death. For example, Rahim is the manager of a firm, to protect his employees, he has chisen a group insurance policy. Now the policy will be issued to Rahim in the name of the firm.
One of the salient features of these group life insurance policies is that you can get insurance till the time you are part of the group. If you leave the group or you are discontinued from the group, your cover ceases to exist.
9. What are Savings and Investment Plan?
Savings and investment plans from life insurance channel your regular savings into long-term investment goals. iSelect Guaranteed Future is an example of life insurance cum savings plan that offers a life cover along with guaranteed maturity benefits. You can plan your investments so that you can achieve your life goals smoothly with this plan. You can moreover protect your financial goal with a premium protection option. This option allows the planned investments to continue even after your death.
What are the ways to choose the Right Type of Life Insurance Policy?
The idea of the right policy varies from person to person. What will be a good option for someone else, may not be as attractive for you. Thus, it becomes important to choose the policy that suits you the best.
What are the ways a person can choose the right type of life insurance policy?
Choose According to the Goal
Different life insurance policies fulfil different goals for different reasons and different people. You should be certain about the goal you want to achieve with your life insurance policy.
Keep in mind the Sum Assured.
Be aware of the needs and wants of your family members as well as your budget, afterwards choose a cover that can fulfil all these. The general rule is that you should select such a sum assured which is at least 10 times your annual income.
Policy Term
Some policies have shorter terms while some policies are made to achieve long-term goals and have a longer time frame as well. Select such a policy that has multiple time frames.
Riders
Riders can certainly increase your sum assured and can cover those occurrences which the basic policy can not. You are advised to choose such type of policy that offers maximum riders.Research about the company that provided the policy and check Information of the company in addition to the policy.