Types of Life Insurance Policies

As the name suggests, life insurance is a contract between an insurer and a policyholder. Premiums paid by the insured during his or her lifetime guarantee that the insurer will pay a set sum of money when that insured person dies.

If you want to ensure that your loved ones are financially secure in the event of your death, you should consider purchasing life insurance. The proceeds of a life insurance policy might be used to pay for final expenses, settle debts, or just to get by. It all comes down to what you need and what you want a policy to do for your family.

Before making a decision on whether or not to get life insurance, it is essential to understand the many options available. Let's take a closer look at the many kinds of life insurance policies.

Term Life Insurance

Insurance policies that are purchased for a specific period of time, such as 10, 20, or 30 years, are known as term plans. This type of insurance does not have any cash value, hence it is less expensive than traditional insurance. This strategy is only beneficial if and when the occurrence occurs.

Term Insurance Plan with Premium Return

Term insurance is a type of insurance that reimburses you for your premiums if you live to the end of the policy period. Endowment Policy is another name for this plan. All that an endowment policy has in excess of a term insurance plan is the added benefit of a lump sum payment in case the insured lives to maturity.

Unit Linked Insurance Plan 

There are a number of ULIPs that fit both of these requirements.

These plans not only offer life insurance, but they also allow policyholders to build money via the process. One portion of the premium goes toward life insurance, while the other is used to build wealth. With this strategy, you can take out the money that's been set aside for "wealth accumulation."

Money Back Policy

It's possible that buying an insurance coverage for a loved one in India is a long-term investment strategy. Life insurance, on the other hand, typically does not allow for early cash withdrawals. When it comes to dealing with the liquidity problem, a money-back policy comes into play here. The benefits of this insurance are spread out over the policy's length and are based on a range of factors.

Whole Life Insurance Policy

In contrast to other plans that expire after a set period of time, a whole life insurance policy provides survival benefits to the insured for the remainder of his or her life. In this type of insurance, the policyholder has the option of taking a portion of the money or borrowing a set amount. Whole life insurance varies from other types of insurance in that it protects the insured until he or she reaches 100 years of age.

Child Insurance Plan

In order to help you meet the financial demands of your child, a child plan combines investments and insurance. Investing in a child's future needs, such as education, might be made easier with a child insurance coverage. Your hard-earned money may be invested in a number of funds according on your financial condition and long-term goals in these schemes, which can begin as soon as your child is born.

Annuity/ Retirement Plan

Financial stability and the accumulation of wealth can be achieved through retirement or annuity plans, which are insurance contracts. Depending on the policyholder's desire, the premiums paid under this insurance will be accumulated as assets and distributed to the policyholder in the form of annuity or lump sum payout. During the period of the policy, if the insured individual dies unexpectedly, the insurance proceeds go to the nominee.