Choosing the correct life insurance policy from the many options available in India is a critical financial choice because it assures the financial security of your loved ones in the event of your unfortunate death. You may be unaware of the many types of life insurance policies available in India and how they impact your financial situation. 

 

In this blog, we'll go over the essential characteristics of various types of life insurance policies, as well as the considerations you should make when deciding which is best for you.

 

Different Types of Life Insurance Policies in India

Term insurance policy

 

The most common kind of life insurance is term life insurance. Term insurances are intended to safeguard against death and are only available for a set period of time which varies depending on the insurance company you choose. The death benefit is paid to the nominee by the life insurance company if the life guaranteed passes away within the policy period. It is a pure risk insurance policy that provides comprehensive coverage at a low cost.

 

This plan also allows you to add riders to expand your coverage. In addition, the nominee has three options for receiving compensation.

 

1) lump sum amount

2) monthly income payment

3) or mixture of both

 

If the insured lives longer than the policy duration, no money is paid out, which is why term plans are referred to as pure risk policies.

 

However, some companies now offer Term Plans with Return of Premiums (TROPS), in which the insurance company reimburses all premiums paid if the life assured outlives the term period. These are, however, high-end policies with hefty insurance premiums.

 

Unit Linked Insurance Plans (ULIP)

 

A Unit Linked Insurance Plan (ULIP) combines insurance and investment in one package. Depending on one's risk level, he or she can invest in various funds offered by the insurance company. The insurance company then invests the accumulated funds in the capital market, such as bonds, equities, and so on.

 

Endowment plans

 

This plan combines savings and insurance in a beneficial way. In this case, a portion of the money is set aside for life insurance, while the rest is invested by the insurance company. This plan also provides the insured with maturity benefits from the company. In addition, this plan offers bonuses and other benefits on a regular basis.

 

Money Back policy

 

Another popular type of life insurance is money-back policies. The Catch – "Money Back," which provides potential policyholders with an understanding of how this form of Life Insurance Policy works, is one of the main reasons for its popularity. 

 

This is a unique life insurance plan in which the insured receives a percentage of the total promised as a survival bonus at regular periods. The remaining Sum Assured is given to the policyholder when the insurance reaches maturity. If the policyholder dies during the term, their dependents receive the full Sum Assured, with no deductions.

 

Whole life insurance

 

As the name implies, this plan protects the insured for the entire life, or in some situations, up to the age of 100. A whole life insurance policy's death benefit is typically paid to the beneficiary in the event of the policyholder's unfortunate death or on the other hand, allows you to collect a maturity benefit if you reach the age of 100.

 

Child Insurance Plans

 

A child plan is a type of life insurance that combines investment and insurance to assist you in meeting your child's financial needs. The money invested in this policy goes towards children's education and other expenses. Most of these plans pay out when the child reaches the age of 18.

 

If the insured parent dies within the policy's term, the insurance company is responsible for immediate payment. In some cases, future premiums are waived and the policy continues until maturity.

 

Retirement Plans

 

Retirement plans give financial security and aid in the accumulation of wealth after retirement. In this situation, you will receive a one-time payment when you reach the age of 60. The nominee receives the immediate payment from the policy provider if the insured dies during the policy period. In this case, the death benefit exceeds the coverage or total insured.

 

Final Thoughts

 

The primary goal of purchasing any type of insurance should be to reduce your financial risk. You should now be familiar with the many types of life insurance policies available in India, and you can use this information to get the best plan for your family. If you're still having trouble deciding, seek expert help from l2linsurance.com for assistance in selecting the best insurance plan for you.