Types Of Life Insurance Policy: Choosing from different types of life insurance policy in India is an important financial decision as it helps you protect your loved ones from life’s uncertainties. However, there are many people who don’t know that there are several types of life insurance policy in India. Each of these can be helpful in their own unique way. Thus, it is important to know the types of life insurance policy available in India.
What is a Life Insurance Policy?
A life insurance policy is a contract between a company and an individual in which the insurer promises to pay some amount to a designated beneficiary upon the death of the insured. There are various types of life insurance policy such as Term insurance, Child Insurance Plan, Retirement Plans, one can choose from.
Different Types Of Life Insurance Policy in India
There are a broad scope in life insurance policies. The main aim of a life insurance policy is to provide financial safety of the family after your death. Here is the list of different types of life insurance policy in India you can choose from –
- Term insurance
- Term insurance with return of premium
- Unit Linked Insurance Plans
- Endowment plans
- Moneyback policy
- Group life insurance
- Child Insurance Plans
- Retirement Plans
- Whole life insurance
Let’s dig deeper into these categories to understand how to choose one of the types of life insurance policies in India.
01. Term Insurance Plan
Term insurance is considered to be the simplest form of life insurance. Its one of the most sought after life insurance policies in India. It is a pure cover plan that provides protection for a fixed period of time. If the life assured dies within that period, the nominee gets the pre-determined death benefit. Term Insurance Policy is comparatively cheaper than other types of life insurance policy.
02. Term Insurance with Return of Premium
A term insurance policy is a type of life insurance policy that provides a death benefit but no maturity benefit. But a term insurance with refund of premium is one of the best insurance policies in India, which also gives you maturity benefits. It is one of the term insurance plans that refunds the premium you pay for surviving the policy period.
03. Unit Linked Insurance Plans
Unit Linked Insurance Plans is one of best life insurance policy which is a combination of insurance and investment. A ULIP provides life cover that provides financial security to your loved ones. A ULIP gives you the opportunity to invest your money in different fund options depending on your risk appetite. ULIPs come with a lock-in period of 5 years, making it a long-term investment instrument that comes with risk protection.
04. Child Insurance Plans
A Child Insurance Plans is one of the different types of insurance policy in India that helps you meet your child’s financial needs. A child insurance plan will help you build assets for your child’s future needs like education. Parents can invest in the best child insurance plans from the birth of your child.
05. Whole life insurance
It is an insurance plan that provides you coverage until the death of the policyholder if the policy is in effect. You can choose a participating or non-participating policy as per your financial needs and risk appetite. The premium rate is lower for a non-participating policy, but the policyholder usually does not get regular dividend benefits.
06. Endowment Plans
Another type of life insurance policy is Endowment Plans which offer you the combined benefits of life insurance and savings. Endowment plans aim to provide maturity benefits to the life insured, in the form of a lump sum payment at the end of the policy term, even if no claim is made. Endowment plans can be broadly classified into two types: with profit and without profit. Policy holders can choose from these two types based on their risk appetite.
07. Moneyback Policy
Money Back policy gives you money during the tenure of the policy. It gives you a percentage (%) of the sum assured at regular intervals during your policy term. As the name suggests, it is one of the best life insurance policy in India that give money back regularly. However, if the policyholder dies during the term, the entire sum assured is paid to their dependents without any deduction.
08. Retirement Plans
It is the types of life insurance policy in India that provides you financial security and security post your retirement. After you retire, you will lose your regular income from a job, so investing in a retirement plan can help you build a stable regular income stream. A retirement plan requires you to regularly invest a certain portion of your income during your working life. In case of your untimely death during the policy term, your nominee will get the death benefit.
09. Group Life Insurance
Group life insurance is one of the types of insurance policy in India that covers a group of people inside a single plan. Unlike individual life insurance policies, which cover one person for a period of time, group insurance covers a minimum of 10 members. The main objective of this policy is to provide financial support, independence and protection to the family of the concerned employee in case of any incident.