Different types of Life Insurance policies available in India
All of us are aware of different types of life insurance policies and their importance in life. In simple words, life insurance policies provide financial security to us in the form of maturity benefit and or death benefit in case of any mishap or untimely demise of the policyholder. Many people understand this factor, and that is why they invest in a life insurance policy. Data from Insurance Regulatory and Development Authority (IRDAI) reveals that in the fiscal ended March 2020, the life insurance companies in India observed 11.36 percent growth in their collective premium income at Rs 48.26 lakh crore.
People nowadays are well aware of life insurance products, but they ignore buying due to the lack of knowledge about each kind of life insurance policy. And suppose we compare the present situation with the pre-COVID-19 time. In that case, 43 percent of consumers are saving more now, and the investments and necessary expenses are the same like before, according to the COVID-19 edition of Max Life India Protection Quotient- express’ (“IPQ/IPQ Express”) survey in association with KANTAR, titled IPQ Express.
Therefore, in this blog, we will try to understand the multiple types of life insurance policies available in India and their various aspects.
Types of Life Insurance policies Infographic
Whole Life Insurance Policy: This kind of life insurance plan offers cash value along with lifelong security until the time policyholder pay premiums. In a whole life insurance policy, the beneficiary gets the death benefit on the demise of the insured; however, there is no specific duration, unlike term insurance. Therefore, the policyholder can enjoy the benefit throughout his or her life. One just needs to pay premiums regularly until he or she passes away, and the aggregated sum of the premium amount gets paid to the dependents.
Endowment Plan: This type of life insurance policy covers the life of the policyholder and also helps to save regularly for a specific time. Endowment Plan offers a lump sum amount on policy maturity if the insured survives and also pays the profits in case of any mishap during the policy term. The premiums of endowment plans are expensive as it pays out the sum assured with profits in case of death and also the maturity benefit if the policyholder survives the policy term.
Term Insurance: A term plan is a type of life insurance policy that offers life coverage for a specific tenure against premiums paid for a fixed term. In case the policyholder’s demise within the policy term, then the nominee receives the sum assured amount, which is also known as the death benefit. If the insured survives the tenure of the policy, then there is no coverage payout. Term insurance is the most affordable (low premium rates) and a simple type of life insurance plan. It does not have any saving component, as there is no maturity benefit.
Unit Linked Insurance Plan: Unit Linked Insurance Plan (ULIP) offers both insurance and investment under one umbrella. Here you can pay the premium either on a monthly or annual basis. A part of the premium paid goes towards insurance coverage while the rest of the premium amount gets invested in other products like mutual funds.
Money Back Policy: It is also a form of an endowment policy and gives regular payments to the nominee instead of paying a lump sum amount on the policy maturity. Here the insurer periodically pays a portion of the insurance coverage amount to the beneficiary. In case the policyholder survives, then he or she receives the balance coverage amount.
Children’s policy: Children’s policy or child plan offers two vital advantages, one securing the future of policyholder’s children financially and financing the crucial moments of their life like marriage, education etc. This policy can be taken in the name of the insured’s child and helps in managing budgetary needs when the kid (s) reach a certain age.
Annuity Plan: Post-retirement, the standard salary source stops to exist for an individual (for the most part for private occupation holders), and it does not take long to deplete benefits like provident funds and gratuity. Around then, the annuity plan gives regular pay in the form of pension to the policyholder such that they enjoy financial freedom after their retirement. It is similar to term life insurance as it covers the insured’s loss of income and protects the danger of outlasting their income. Under this policy, the premiums paid are changed into regular payments after your retirement, lasting for the rest of your life.
All of these types of life insurance policies come with advantages and disadvantages. Therefore, you need to select the ideal one for yourself based on your needs and requirements. You can visit BimaKaro.in to gain more information about the same.