After taking a home loan of ₹ 1 crore, Sanjay, a 30-year-old Accounts professional, decided to buy a life insurance policy in order to secure his family's financial future in his absences. When he started his search online, he came across various terms like endowment plan, ULIP, whole life plan, money back plan, etc., and he simply logged off. As a result, his decision to get insured got pushed back by a few months.
This is what happens to many people who don't understand the language and terms used in life insurance policies. Hence, for those seeking information, here is a quick, clear, and crisp understanding of the five different types of life insurance policies in India.
#1. Term Life Insurance Plans
- It is a pure risk cover policy that offers only death benefit and no maturity benefit.
- This type of life insurance gives you maximum coverage with minimum premium.
- The objective of term plans to offer financial protection to the nominees in the event of the policyholder’s unfortunate death.
Note that many insurance companies like Future Generali India Life Insurance offer term plans that return premiums to the life insured at maturity along with accrued bonus.
#2. Endowment Plans
- An endowment plan = insurance cover + savings
- The plan offers both death benefit as well as maturity benefit i.e., sum assured is paid to the nominee or family in case of death or sum assured amount plus accumulated bonus in case the insured outlives the policy term.
#3. Whole Life Insurance Plans
- Whole life insurance plans also known as traditional plans cover the life insured up to 100 years of age.
- It offers both death benefit as well as maturity benefit.
#4. Money Back Plans
- As the term suggests, the policy offers the sum assured money back at regular intervals, during the policy term.
- The balance of the sum assured is paid as lump sum including accrued bonuses on maturity.
- In case of the unfortunate death of life insured, the death benefit is paid to the nominee.
#5. Unit linked insurance plans (ULIPs)
- ULIPs = insurance + investment + tax-saving tool i.e., Triple Advantage in one plan!
- One part of the premium paid is used to offer life cover and remaining premium is invested into various schemes such as Equity and Debt.
- Moreover, you can choose the funds to invest depending upon your risk appetite and investment horizon.
- You can use a ULIP calculator to calculate the returns based on the amount, tenure, and frequency of investment.
Read Suggestion: ULIPs: Unit Linked Insurance Plans Starting @2,000 Per Month
#6. Child Plans
- A child insurance plan gives life cover + either one time payout or pay-outs at regular intervals to fulfil financial requirements for important events in a child’s life, for instance, higher education, overseas studies, marriage, etc.
- In case the parent passes away during the policy term, payment is made to the child or family.
- Many insurance companies waive off the premiums in case of death of the policyholder (usually the parent) and make the payment (to the child) after maturity period.
#7. Retirement Plans
- Retirement plans also known as pension plans offer lump-sum or monthly income in the form of pay-outs for a financially independent and worry-free retirement life.
- You can opt for annual payments or a single pay-out after the age of 60 years.
- In case of the death of the insured, payment is made to the nominee either based on coverage, fund value or 105% of premiums paid.
So many options! But, which life Insurance policy should I buy?
That’s the advantage of life insurance policies you get various options to choose from depending upon your financial needs and goals. Hence, when buying a life insurance policy, it is important to not buy the hype, advertisements, or what your others are buying. Because every individual and his/her family have different needs that require different solutions. The following are a few must consider factors while buying a life insurance policy:
- Number of dependents
- Yours and your dependents lifestyle
- Various life goals and the amount of finance required to achieve those goals
- Monthly expenses incurred by you and your family
- Do not forget to keep the increasing inflation rate in mind
To know more, read the article: Find the right life insurance policy in just 3 easy steps!
To conclude, do not procrastinate that you may not require life insurance right now, for life is uncertain and it is important to stay prepared. To get the best life insurance products, get in touch with Future Generali India Life Insurance company NOW! We will be happy to help you!