To keep up with the life insurance needs of the customers, insurance providers in India now offer many different types of insurance policies. While the options make it easier for a customer to select a plan that best meets their budget and requirements, they also make the selection confusing for someone new to life insurance.
To help you make the right decision, here are 6 life insurance types and their top features-
- Whole Life Insurance
A whole life insurance plan is a traditional insurance policy that offers life coverage throughout your life. In case of the unfortunate demise of the policyholder, the policy nominee will receive the death benefit. This is a pure risk cover policy that generally does not come with any benefits or returns.
- Offers life coverage for the entire lifetime
- Level premiums for specific periods for maximum savings when purchased at an early age
- Some insurers also offer loans against the cash value of the policy
- Term Plan
A term plan is a modern and more affordable version of traditional life insurance plans. The plan covers the policyholder for a fixed duration ranging between 10-30 years or more. In case of the policyholder’s demise within the policy tenure, the beneficiary receives the death benefit.
- One of the most affordable forms of life insurance
- Offers life coverage for a fixed duration
- Plans options like Return of Premium (ROP) for additional benefit
Unit Linked Insurance Plan or ULIP combines life insurance with investment. One portion of the policy premium is invested in the chosen fund to generate higher returns in the long run. On maturity, the policyholder can withdraw the lump sum amount. On demise within the tenure, the nominee receives the death benefit.
- Combination of life insurance and investment
- Fund options include equity, debt, and balanced
- Option to switch between funds even after purchasing the policy
- Endowment Plan
Endowment plans combine life insurance with savings. A part of the premium is added to the risk-free corpus and returned to the policyholder on survival. Policy nominee receives the death benefit on policyholder’s demise within the policy tenure.
- Encourages long-term saving
- Guaranteed bonuses to boost savings
- Zero risk from market conditions
- Retirement Insurance Plan
As the name suggests, a retirement insurance plan combines life insurance and a retirement or pension plan. Apart from offering life coverage, the plan also provides regular pensions to the policyholder after retirement. Deferred annuity and immediate annuity are two popular retirement plan categories.
- Combination of life insurance and pension plan
- Guaranteed additions to basic sum assured
- Guaranteed monthly income after retirement
- Money-Back Life Insurance
With a money-back life insurance policy, the policyholder receives some portion of the maturity benefits at regular intervals. The remaining amount and bonuses are paid on maturity. Policy nominee receives death cover on the demise of the policyholder within the policy tenure.
- A portion of maturity benefit paid at regular intervals
- Ideal for meeting short-term liquidity needs
- Guaranteed bonuses paid on maturity
Choosing the Best Life Insurance Plan
To make the right decision, it is essential to first fully understand the working and features of all the top life insurance plans. Only when you know the benefits in detail, can you choose a plan that best meets your budget and insurance needs.
Look for a leading insurance provider that offers a wide range of life insurance plans to compare the top options and select one that matches your expectations. Reputed insurers also provide complete assistance to help customers make the right decision.