After a person decides to purchase life insurance, he/she must ask what kind of life insurance he/she needs. Some are outdated, some have current values similar to investments, others are suitable for older and unhealthy people.
Basically different types of life insurance policies give different choices for the person to invest in various policies.
Life insurance mainly consists of two basic types. That is life insurance and traditional life insurance. In the case of a life insurance policy, the insured pays the premium for a period of time, but in the case of a life insurance policy, the policyholder must pay the premium until death.
Every life insurance policy has advantages and disadvantages.
Different Types Of Life I
nsurance Policies In India
- Term Plan – Pure risk areas
- Unit Link Insurance Plan (ULIP) – Insurance + Investment Options
- Endowment Plan – Insurance and savings
- Money Back Plan– For regular transportation insurance
- Life Insurance – Lifetime Warranty Life Insurance
- Child Plan – Achieve goals for children’s lives, such as education, marriage
- Retirement Plan – Plan your pension and tidy neatly
Also read: Top Life Insurance Plans In India
1. Term Life Insurance
Running insurance is the simplest life insurance. Easy to understand and easy to buy. This is an important type of life insurance.
The term plan provides for compensation for the risk of death during a specific period.
If the insurance period expires, the life insurance company pays the death insurance premium to the candidate. This is a pure risk hedging program that provides high compensation at low premiums.
Riders can be added to expand coverage.
The death benefit is paid in a lump sum, monthly payment or both.
If the life of the insured still exists after the end of the insurance contract, no payment will be made.
However, recently there are companies that offer a time plan for TROPS (Term Plans with Return of Premiums), which will reimburse full insurer for the premium paid if there is insurance during the insurance period. However, such a plan is more expensive than the Vanilla Term insurance plan.
Best known for: Low price and high insurance value (compensation deposit).
Benefits term plan: When a family dies prematurely, the family will receive huge sums of money and help offset the loss of income from family leader deaths. In addition, the money can be used to pay for mortgages, monthly household expenses, childcare, child marriage, etc.
2. Unit Linked Insurance Plan (ULIP)
As the name comes, ULIP is another type of life insurance. The unit plan is a complete combination of insurance and investment. Premiums paid to ULIP serve to partially cover the risk (insurance) and are partially invested in funds.
Depending on the risk tolerance, you can invest in various funds provided by insurance companies. Later, the insurance company will invest the amount accumulated on the capital market, ie bonds, stocks, debt securities, market funds or hybrid funds.
Best known: Long investment opportunity with much higher investment flexibility.
Benefits of ULIP: Invest money according to your risk appetite. They have the opportunity to invest in equities, debt or hybrid funds through life insurance companies in full transparency.
3. Endowment plan
Endowment plan is also a type of life insurance policy. The endowment plan is another type of life insurance plan that combines insurance and savings.
Compensation for life insurance requires a certain amount, the rest is invested by life insurance companies. In the endowment system, insurance companies benefit from the expiration date if the life of the insured continues beyond the duration of the contract.
In addition, bonuses can be paid regularly in the endowment system, bonuses are paid on the due date or in the event of death to certain persons. The death grant at the time of death lies with the candidate.
Although the endowment system is commonly referred to as traditional life insurance, there are investment elements, but the risks are lower than other investment products and there are returns.
Best known for: long-term savings option for people with significantly lower risk appetite for investments.
Advantages of the donor system: Long-term financial plan and the ability to earn money when due.
4. Money Back life insurance
The money back plan is a unique kind of life insurance, and part of the sum insured is regularly insured as a survival.
The repayment schedule may also receive occasional bonuses claimed by the Company. In this way, insured persons can achieve short-term tax targets.
Best known for: Short-term investment products to achieve short-term financial goals.
Advantages of the repayment plan: Short-term financial plan and the ability to earn money when due.
5. Life insurance
Lifetime insurance covers lifelong life or, in some cases, age up to 100 years. It differs from the long-term plan for the specified period. As term life insurance is the type of life insurance policy, life insurance also comes under types of life insurance policy.
The amount of compensation or cover of the insured will be determined at the time of the purchase of the insurance contract and paid to the candidate on the death of the insured person with any bonus.
However, if the life of the insured person survives at the age of 100, the insurance company pays a capital guarantee incurred during the life of the insured.
The prize money will be higher than the long-term plan. The entire life insurance also provides for partial withdrawal after the end of the payment period for the insurance premium.
Best known for: Life cover of whole life.
Benefits of the overall life plan: opportunities to leave the permanent protection and inheritance of policyholders as heirs.
Also read: Life Insurance Quote
6. Child plan
Child plan is an important type of life insurance policy. The child plan helps build a body for the future growth of children. The child plan will help to build funds for education and marriage of children.
Most childcare plans include annual installments or fixed term payments after 18 years.
In the event of an unfortunate event, the insured parent will forfeit during the term of the insurance contract: Immediate payment must be made by the insurance company. Some plans for children will waive future premiums because of the death of the insured, and this insurance will continue until the end of the insurance.
The best known: To raise money for the future of your child.
Advantages of the plan for the child: It helps to realize the dream of your child.
7. Retirement plan
After child plan retirement plan is also one of the types of life insurance. Retirement plan helps build dead bodies for retirement. It helps you to live independently, economically and without worries.
Most childcare plans include annual installments or one-off payments after the age of 60.
In case of unfortunate events, the insurance period expires during the insurance period. The immediate payment is made by candidates of insurance companies.
The death benefit is increased by 105% of the cover or the value of the policy or the premium paid. If the life of the insured person exceeds the due date, a benefit advantage is paid.
In this case, the payment corresponds to the value of the fund that must be used to earn the pension.
Best known: Long-term savings and retirement plans.
Benefits of old-age provision: It helps to build up an aging body.
Hence life insurance policy must be issued by each and every person so as to secure his/her family. These different types of life insurance policies provide different benefits to the person who has issued it.
Also read: Canara HSBC OBC Life Insurance
This article was written by:
Abhishek A. Kamble (Digital Marketing Executive & SEO Expert)