Life insurance is helpful for you as well as your family. If someone is the only earning person in the family, then life insurance can provide some financial relief to his dependents after his death. There is not just one type of life insurance. Some policies give you the option of getting returns through investments and cover. Depending on your needs, you can choose from 7 types of life insurance policies.
Term Insurance Plan
This plan can be purchased for a fixed period, such as 10, 20 or 30 years. Under this plan, you get coverage for a tenure chosen by you. There is no maturity benefit in such life insurance policies. These provide life cover without a savings/profit component. Therefore, these are cheaper than other policies. In term insurance, on the policyholder’s death during the policy term, the assured sum, i.e. a fixed amount, is given to the beneficiary under the policy.
Endowment Policy
This type of life insurance policy contains both insurance and investment. This policy covers risk for a fixed period, and at the end of that period, the assured sum, along with bonuses, is returned to the policyholder. Under an endowment policy, the face value of the policy amount is paid on the policyholder’s death or after a specified number of years. Some policies also pay out in case of critical illness.
Money Back Insurance Policy
This policy is a type of endowment policy. In this policy, there is a combination of investment and insurance. The difference is that in this life insurance policy, the assured sum and the bonus are returned in instalments only during the policy term. The last instalment is payable at the end of the policy. The entire assured sum goes to the beneficiary if the policyholder dies during the term. However, the premium of this policy is the highest.
Whole Life Insurance
In the Whole Life Insurance Plan, you get protection throughout your life. That is, there is no term of the policy. On the death of the policyholder, the nominee receives the insurance claim. Other life insurance policies have a maximum age limit, usually 65–70 years.
After that, the nominee cannot take the death claim on death. But under whole life insurance, the nominee can claim even if the policyholder dies at 95. The premium of this policy remains very high. Under this policy, the policyholder can partially withdraw the insured sum. He can also take money as a loan against the policy.
ULIP
In this plan, both protection and investment remain. In traditional endowment insurance and moneyback policies, the returns are guaranteed to an extent, whereas in ULIPs, there is no guarantee of returns. This is because the investment portion in ULIP is invested in bonds and shares, and like a mutual fund, you get units.
In this case, the returns are based on the ups and downs of the market. However, you can decide how much of your money should be invested in shares and how much money should be invested in bonds.
Retirement Plan
Life insurance coverage is not available in this plan. This is a retirement solution plan. Under this, you can create a retirement fund by assessing your risk. After a fixed period, a fixed amount will be paid to you or your subsequent beneficiary as a pension. This payment can be on a monthly, half-yearly or yearly basis.
Child Insurance Policy
These plans have been designed considering the expenses and other needs of the children’s education. A child plan pays a lump sum after the policyholder’s death, but the policy does not lapse. All future premiums are waived off, and the insurance company continues to invest on behalf of the policyholder. The child gets money for a certain period.
