Over the years, with the growing insurance needs of the people, the life insurance sector has evolved immensely. Today, there are different types of life insurance plans available in the market. And, just as important it is to purchase a life cover to protect your family, it is equally critical to buy the right type of policy.
If you are a first-time insurance buyer, you may not be fully aware of the different types of life insurance policies available in India. So, knowing about these plans will help you choose the right kind of policy.
- Term Insurance Policy
It is a type of life insurance policy that provides a death benefit to the nominee or the beneficiary in the event of the policyholder’s demise during the policy period. However, if you are a policyholder and survive the policy term, you will not receive any survival benefits.
A term insurance policy is an excellent way to secure your family from the financial hassles they may face due to your sudden demise. The payout they receive will act as an income replacement and allow them to meet their regular expenses.
- Whole Life Insurance Policy
A whole life insurance policy, as the name suggests, provides coverage throughout your lifetime if you pay the premium on time and keep the policy active. One of the significant features of this policy is that it also has a cash value component that increases over the years.
You can withdraw the amount or avail of a loan against it as and when needed as per your convenience. In the event of your unfortunate demise, before you repay the loan, the insurer will pay the death benefit to the nominee after deducting the outstanding amount.
- ULIP – Unit Linked Insurance Policy
This is a one-of-a-kind life insurance policy that gives you the dual benefit of insurance protection and investment flexibility. In ULIP, a part of the premium you pay is used to provide insurance protection. The remaining amount is invested in different asset classes like equity funds, debt funds, government bonds, etc., depending on your financial goals and risk-taking capacity.
- Retirement plans
Retirement is inevitable. It would help if you plan your retirement well in advance to have the necessary financial cushion to be independent during your old age. And one of the best ways to live the second innings of your life cheerfully and without any financial hassles is to invest in a retirement plan from a young age.
These plans allow you to save a small amount towards your retirement goal throughout your working life and help you build a significant corpus. On maturity, the accumulated amount is invested to generate regular income for you, known as annuity or pension.
- Child Insurance Policy
A child insurance policy is a savings-cum-investment plan specifically designed to help you meet your child’s future financial needs. It allows you to give your child a bright future and helps them accomplish their dreams. You can start investing in a child insurance plan right from the day when your child is born so that they can withdraw the amount when they become an adult.
Some child insurance plans give you the flexibility to withdraw partially at specific intervals for emergencies like paying education fees and medical charges.
Thus, there are different types of life insurance policies available in India. Ensure that you assess your needs well and choose the right type to get the maximum benefit from them.