Life Insurance sector is one of fastest growing finance related segment in India. Therefore Life insurance is an insurance coverage that pays out certain amount of money to insured. Such as death of individual who is insured. This protection is also offered to you and you’re Family. Hence, check out retirement plans.
What are types of Life Insurance?
But life insurance coverage period is more than year. So this requires periodic premium payments, either monthly, quarterly or annually. You can see below types of life insurance.
There are two basic types of life insurance policies. Such as Traditional Whole Life and Term Life Insurance. Moreover, whole life is policy you pay till death of policy holder. And term life is policy for fixed amount of time. Here are few common types of covers including Whole life and Term Insurance policy. Check investing in unit linked insurance plans
Term plans are most basic form of life insurance. Further it offers coverage only for set period of time. On occurrence of death or permanent disability during tenure of plan. Then beneficiaries will be paid benefits to cover income loss or unpaid debt. Disability can be both partial and total depend on type of plan. However, if insured survives term of plan, no such benefits are paid.
They are most affordable form of life insurance as premiums. And they are cheaper compared to other life insurance plans. Term policy is for specific period of time for 1 to 10 years. But it renewable at end of each term. Also, premiums will increase at end of each term.
However, online term insurance plans provide pure risk cover with low premiums. And sum assured is paid to beneficiary if policyholder expires over policy term. If policyholder survives, there is no pay out.
There is savings linked to such policies. This comes with maturity periods as decided by insurer. And premiums are high. You need to pay out sum even if you do not die. But such policies are useful for preparing for expenses later in life. Therefore endowment plans pay out sum assured under both scenarios death and survival.
However, endowment plans charge higher fees or expenses. It reflected in premiums for paying out sum assured along with profits either death or maturity. Hence, premiums profits are invested in asset markets. Like equities and debt. If insured survives policy term agreed maturity benefits become payable.
Whole Life Insurance
Unlike term insurance policy, whole life plans give you lifelong protection. Such cover comes with death benefits to your family. You can continue to be financially stable after your death. It also comes with maturity benefits after expiry of term. Most people use this type of policy to create an inheritance for their children.
These plans can be taken in name of child or parent. However, it is only for benefit of child. This helps parents mobilize finances when child reaches particular age or stage of life.
In these types of life insurance policies, insurer agrees to pay insured sum of money periodically. Purpose of an annuity is to protect against financial risks as well as provide money in form of pension at regular intervals. Thus, whatever your financial requirements, there is wide variety of insurance policies to ensure that your requirement is fulfilled as per your needs and planning.
Just like term insurance policy. This type of insurance aims at covering income loss. After retirement, an individual is cut-off from regular source of income. Like gratuity or provident funds, run risk of getting exhausted quickly. Pension is model provision for safe-guarding retirement as like regular income. So, it is best to get pension plans in order to ensure financial independence after retirement.
Money Back policy
This life insurance policy is preferred by many people. And it gives periodic payments during term of policy. In other words portion of sum assured is paid out at regular intervals. If policyholder survives you will gets balance sum assured.
This payment is made on periodical basis in form of survival benefit. When term expires, outstanding sum assured is paid as maturity benefit. However, life risk is covered for entire amount of agreed sum assured. Even if portion of benefits has already been paid. A money back policy is option of endowment plan.
In case of death over policy term beneficiary gets full sum assured. You can see various life insurers are also offering new ULIP money back policies. Premiums paid and returns accumulated though money back policy or its ULIP variants are tax-exempt.
ULIPs are market-linked life insurance products that provide combination of life cover and wealth creation options. A part of amount that people invest in ULIP goes toward providing life cover. And rest is invested in equity and debt instruments for maximizing returns. .ULIPs provides flexibility of choosing variety of fund options depends on your risk appetite.
You can invest large in equity market with objective of high capital appreciation. And it Invest in debt markets, cash, bank deposits and other instruments. To preserve capital while providing returns. Therefore ULIPs are option of traditional endowment plan. They are combination of investment and insurance
ULIPs can be useful for achieving various long-term financial goals such as planning for retirement, child’s education, marriage etc. As per above, performance of ULIP is linked to markets. Probably, value of investment portfolio is capture by NAV (net asset value). Hence, there are many similarities between ULIPs and mutual funds.
Finally, see types of insurance policies in India. However, check types of General Insurance in India. In addition, you can see Types of Life Insurance Policies (Not Posted). For more details see key benefits of life Insurance.