Life Insurance: 8 types of life insurance policy, choose according to your needs
Types of Life Insurance: if someone is the sole earner of the family, then after he leaves, Life Insurance gives some degree of financial relief to the people dependent on him. But it’s not the only kind that happens. Some policies offer the option of getting returns through savings and investments along with the cover. That is, it also comes in handy for the insured himself. There are 8 types of life insurance policies available in India. The insured can choose the policy for himself according to his needs. Let us know the types of life insurance policies-
1. Term insurance plans
This plan can be purchased for a fixed time, like 10, 20 or 30 years. This plan gets coverage for a tenor i.e. duration chosen. There is no maturity benefit in such a life insurance policy. They provide life cover without savings/profit component. So, they are cheaper than other policies. In Term Insurance, The Sum Assured under the policy i.e. a fixed amount is given to the beneficiary on the death of the policy holder during the policy term.
2. Moneyback insurance policy
This policy is a kind of endowment policy. This policy also combines investment and insurance. The difference is that the sum assured along with the bonus in this life insurance policy is refunded in installments only during the policy term. The last installment gets on the end of the policy. If the policyholder dies during the policy term, the entire assured sum is provided to the beneficiary. However, the premium of this policy is the highest.
3. Endowment policy
Such a life insurance policy consists of both insurance and investment. This policy has a risk cover for a fixed period and the sum assured along with the bonus is refunded to the policyholder at the end of that period. The face value of the policy amount is paid under the endowment policy after the death of the policyholder or the prescribed years. Some patients also pay in case of serious illness.
4. Savings and investment plans
This kind of life insurance plan assures the insured and his family of a lump sum fund for future expenses. Such plans not only provide excellent savings tools for short-term and long-term financial goals, but also assure a certain amount of money to your family as an insurance cover. This type of life insurance category covers both traditional and UNIL-linked plans.
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This plan also has both protection and investment. While the returns available in traditional i.e. endowment insurance policy and Moneyback policy are firm to an extent, there is no guarantee of returns in ULIPs. This is because the part invested in ULIPs is put into bonds and shares and like a mutual fund, you get a unit. In such a situation, the return is based on market fluctuations. However, you can decide how much money you have in the stock and how much money you have in the bond.
6. Lifetime life insurance
You get life-long protection in the lifetime Life Insurance Plan. That is, the policy has no term. On the death of the policyholder, the nominee gets an insurance claim. Other life insurance policies have a maximum age limit, which is usually 65-70 years. After that, the nominee cannot take the death claim if he dies. But even if the policyholder died at the age of 95 years under lifetime life insurance, the nominee can claim. The premium of this policy remains very high. Under this policy, the policyholder has the option of partially withdrawing the insured sum. Apart from this, he can also take money as a loan in lieu of the policy.
7. Child insurance policy
These plans are designed in view of children’s education expenses and other needs. In the child plan, the lump sum amount is paid after the death of the policyholder but the policy does not end. All future premiums are waived and the insurance company continues to invest on behalf of the policyholder. The child receives money until a certain period.
8. Retirement plans
There is no life insurance cover in this plan. This is a retirement solution plan. Under this, you can assess your risk and create a retirement fund. A certain amount will be paid as a pension to you or the beneficiary after a fixed period. This payment can be on a monthly, half-yearly, or annual basis.