Almost every individual knows about life insurance policies, but often they don’t understand its importance in life. Probably it might be because they are not aware of the different types of life insurance policy available in the market and their usage. To give a clear picture of all forms of life insurance policies, here are details about each of them.

Term life Insurance: Term insurance is the most affordable and simplest life insurance among all other different types of life insurance policy available in the market. It offers financial coverage in the form of sum assured to the policyholder for a fixed period of time which is usually paid out to the beneficiary upon the untimely demise of the insured. Term insurance only offers a death benefit, which is relatively high as compared to other life insurance policies but offers no maturity benefits. This death benefit amount enables the family members of the policyholder to lead a financially secured life.

It is the most popular type of life insurance policy as term insurance is specifically designed to provide complete protection to your family in your absence. In contrast with the high sum assured, term insurance has the lowest premiums as compared to other life insurance forms. Therefore, it is always advised to buy term insurance when you are young as the same premiums get increased as you grow old. However, the premiums remain unchanged throughout the term of the policy; so, if you bought term insurance at a young age, you could enjoy low premiums for your entire life.

Endowment Plans: An endowment policy is a combination of an investment scheme and an insurance plan. Endowment plans is different from term insurance as they come with maturity benefit, and they also have a shorter tenure like 10 to 20 years as compared to other life insurance policies. The premiums of endowment policies are usually on the higher side that is, the shorter the term, the higher will be the premiums. If the policyholder dies or suffer permanent disability during the policy term, then the sum assured, or a lump-sum amount is paid out to the policy nominees. But if the policyholder survives the policy tenure, then the pre-decided maturity benefit becomes payable.

Whole Life Insurance Policy: Whole life policies offer lifelong coverage to the policyholder. The tenure of this type of life insurance policy is not defined and usually extends up to 80-100 years. Under this insurance policy, the insured person pays regular premiums until he or she untimely passes away upon which the beneficiary of the policy gets the sum assured along with bonuses. As the policy last for the entire lifetime and probably so is the coverage and premiums. The policy expires only in case of an eventuality. Whole life insurance policy has different types that include single premium, limited pay, participating, non-participating, limited pay, as well as a single premium. It offers life coverage as well as a savings component and is ideal for those who look to build an inheritance for their kids.

Unit Linked Insurance Plans: ULIPs are a combination of investment and insurance as it provides risk cover along with investment options. It is a complete package that offers protection, returns as well as a tax benefit. The premium you pay towards the policy, partly goes into your insurance coverage and the rest of the amount gets invested towards debt, equity or combination of both same as a mutual fund. Unit Linked Insurance plans help in achieving life goals while keeping your family financially secure in your absence. On death or maturity, it pays out the sum assured or the investment collection whichever is on the higher side to the policyholder.

Money Back Policy: Money back plans pay out the sum assured on maturity and also gives a certain amount periodically as survival benefits. And in case of policyholder’s untimely demise within the policy term then full sum assured is paid to the beneficiary without making any deduction in the survival benefit amount. The primary objective of the money-back plan is to generate income at regular intervals to meet specific planned expenses. Money-back policies also offer add-on benefits like accidental death benefit, waiver of premium benefit, critical illness benefits and additional term benefit. Under this form of life insurance policy, the policyholder gets a bonus from the insurer based on his or her performance.

You will never want your loved ones to suffer in your absence, be it financially or emotionally. Therefore, you need to plan carefully to secure their future. Carefully read through different types of life insurance policy and pick the right one for you based on your requirements. If you want to have more information on the same, you can visit BimaKaro.in and take guidance from their insurance experts.

Source: https://bimakaro.in/ik/term-life-insurance/different-types-of-life-insurance-policies-available-in-india-579