Life Insurance: There are 8 types of policies available, take a plan according to your need
Types of Life Insurance: Unfortunate does not happen by telling. In such a situation, it is natural to worry about the future of your family and the people you depend on. Life insurance is helpful in removing this concern to some extent. If someone is the sole breadwinner of the family, then after his death, life insurance provides some financial relief to the people dependent on him. Life insurance is not of the same type. Some policies offer cover as well as the option to get returns through savings and investments. There are 8 types of life insurance policies available in India.
1. term insurance plan
This plan can be purchased for a fixed tenure, such as 10, 20 or 30 years. Coverage is available for the chosen term in this plan. There is no maturity benefit in such a life insurance policy. That is, they provide life cover without the savings/profit component. Hence term plans are cheaper than other policies. In term insurance, on the death of the policy holder during the policy term, the Sum Assured under the policy is paid to the beneficiary.
2. endowment policy
This type of life insurance policy consists of both insurance and investment. There is a risk cover for a specified period and at the end of that period the sum assured along with the bonus is returned to the policyholder. Under the endowment policy, the face value of the policy amount is paid on the death of the policyholder or after the specified number of years. Some policies also pay in case of critical illness.
3. moneyback insurance policy
This life insurance policy is a type of endowment policy. It is also a combination of investment and insurance. The difference is that in a moneyback policy, the sum assured along with the bonus is returned in installments during the policy term itself. The last installment is available at the end of the policy. If the policyholder dies during the policy term, the entire Sum Assured is paid to the beneficiary. But keep in mind that this policy has the highest premium.
4. ULIP Plan
ULIP plans also have both protection and investment. While the returns you get in traditional endowment insurance policies and moneyback policies are assured to an extent, there is no guarantee of returns with ULIPs. The reason being, in ULIPs, the investment portion is invested in bonds and stocks and you get the units just like in mutual funds. In this case, the returns are based on the volatility of the market. However, you can decide how much of your money should be invested in stocks and how much money should be invested in bonds.
5. Savings and Investment Plans
Such life insurance policies not only provide great savings tools for short term and long term financial goals, but also assure your family of a certain amount in the form of insurance cover. This type of life insurance policy category covers both traditional plans and ULIP linked plans.
6. lifetime life insurance
In Lifelong Life Insurance ie Whole Life Insurance Plan, the policyholder gets protection for life. This means that the policy does not have a fixed term. On the death of the policyholder, the nominee gets the claim of insurance. Other life insurance policies have a maximum age limit, which is usually 65-70 years. After that, in case of death, the nominee cannot take the death claim. But the specialty of lifelong life insurance policy is that even if the policyholder has died at the age of 95 years, the nominee can claim. Under this policy, the policyholder has the option to partially withdraw the sum insured, and can also take the money as a loan against the policy.
7. child insurance policy
These plans have been made keeping in view the cost of education and other needs of the children. In child insurance, a lump sum amount is given after the death of the policyholder but the policy does not lapse. All future premiums are waived off and the insurance company continues to invest on behalf of the policyholder. The child gets money for a certain period.
8. retirement plan
Retirement plan is a retirement solution plan, it does not have life insurance cover. Under the retirement plan, you can build a retirement fund by assessing your risk. After a specified period, you or the beneficiary after you will be paid a certain amount as pension. This payment can be on monthly, half yearly or yearly basis.
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