Buying the right life insurance policy is one of the most basic requirements to live a comfortable and stress-free life. A life insurance policy not only guarantees the financial safety of your family members after you are gone but also helps you build a corpus to meet your and your family’s long-term financial goals.
In India, there are different types of life insurance policies that serve different purposes. You can choose the best life insurance plan to suit your specific needs and requirements. And to make the right decision, you must be aware of the different types of life insurance, their features and benefits.
Term Life Insurance
Term life insurance is commonly referred to as pure protection policy. It is the most basic form of life insurance. As the name suggests, term insurance remains active only for a specific duration, and at the end of the policy duration, the coverage becomes void.
Term insurance has no investment or savings component. Therefore, its premium is the lowest among all life insurance policies in the market. Its working is simple, and many people prefer buying term insurance because it offers high coverage at an affordable cost.
In term insurance, you get coverage until the policy tenure. In the event of your demise during the policy period, the insurer will pay the death benefit to your family. But, if you outlive the policy term, your policy will expire, and you don’t get any returns or maturity benefits.
Unit Linked Insurance Plan is a unique financial instrument. It offers the dual protection of insurance protection and wealth building. A part of the premium you pay for the policy is used for providing insurance coverage, and the remaining amount is invested in money market instruments across asset classes to generate returns for you.
The insurance companies allow you to choose the assets you want to invest in based on your long-term financial goals and risk-taking capacity. Thus, ULIPs, help you build wealth for long-term goals while securing your family’s financial future. Besides, ULIPs allow you to enjoy tax benefits under different sections of the Indian Income Tax Act.
Endowment Life Insurance
It is one of the popular types of life insurance that offers dual benefits of insurance protection and savings. In this policy, in the event of your demise during the policy, the insurer pays the death benefit plus the accrued bonus and the guaranteed additions (if any) to the nominee. The bonus is paid for the number of years you survived during the policy term.
Whole Life Insurance
As the name suggests, a whole life insurance policy offers coverage until your demise. There are two types of whole life insurance – participating and non-participating whole life insurance plans.
Although the premiums for participating plans are higher than non-participating plans, you get dividend payments at regular intervals. If you are looking for an affordable policy, you can purchase a whole life insurance plan.
Child Life Insurance
A child life insurance policy is a savings-cum-investment plan that guarantees the financial safety of your child’s future upon your unfortunate demise. It is an ideal plan for securing your child’s well-being, even in your absence. As a parent, you can invest in the best child life insurance policy to accumulate funds for their future requirements like education, marriage and other significant expenses.
Now that you know the different types of life insurance policies available in India, choose the right one to suit your needs and secure your family’s financial future.