Types of Life Insurance Plans in India

Any idea what saves your family's future in case of your unfortunate demise? Your life insurance buddy that comes in different forms. These include term insurance plans, unit-linked insurance plans (ULIPs), endowment plans, money-back plans, whole life insurance plans, etc. All these life insurance plans in India disburse a lump sum amount to the policyholder's nominees in case of his/her death during the policy term. Let's check out the functionality of all these life insurance plans in India.

Term Insurance Plans in India

Term insurance plans are undoubtedly the best life insurance plans in India. These plans offer the maximum sum assured, the amount payable to the nominees of the policyholder should the latter die during the policy term, for a lower premium.

The premium payable depends on factors such as the policyholder’s age, and his/her health status, family's medical history, occupation, etc. The premium for a term insurance plan at an age of say 25 years will likely be lower than for the policyholder getting this policy at 40 years by at least 100%.

Someone with a superior health record individually and on a family basis will likely get a substantially lower premium compared to policyholders with a medical history full of diseases and ailments.

Whereas working in an office environment will likely lead to a lower premium than working at construction sites, factories, mines and other workplaces fraught with increased injury risks leading to death.

Term insurance proceeds can be used to pay off outstanding debts, wedding and education expenses, buy a home or even a car, etc.

Interestingly, term insurance plans come with critical illness, personal accident and other riders for an additional premium.

Compare the best term life insurance plans in India online based on the sum assured amount, the premium payable, policy term and other benefits before choosing the one for yourself.

Unit-linked Insurance Plans

Unit-linked Insurance Plans (ULIPs) offer a unique combination of death cover and market-linked investment benefits. You can choose to invest in different fund options - Equity, Debt and Hybrid - based on your risk appetite.

If your risk appetite for investment is high and can deal with market fluctuations, consider investing in the top-performing equity funds that put your money in equity and equity-related instruments.

In case you can't afford much investment risks, choose debt funds that put your money in bonds, debentures, government securities, money-market instruments, etc.

Investing in hybrid funds makes sense if your risk appetite is medium. These funds pool your money in both equity and debt instruments. The extent of investment distribution across these two assets will depend on the side the fund is oriented.

In the case of an equity hybrid fund, the investment will drift more towards equities. Whereas in the case of a debt hybrid fund, the investment will be more towards debt instruments.

Endowment Life Insurance Plans

Seeking guaranteed returns and death cover benefits? Trust endowment life insurance plans in India. These plans accumulate your savings while letting your dependent nominees receive the sum assured amount should you die during the policy term. A lump sum benefit is payable when this life insurance policy matures. As a policyholder, you can choose from different time frames for premium payments. And if you buy a participating endowment plan, you will also receive bonuses. What’s more, the returns received on these plans are free of taxes as per Section 10(10D) of the Income Tax Act, 1961.

Money-back Life Insurance Plans

Money-back plans are a type of endowment policy with a slight difference. Here the insured person receives a specific percentage of the sum assured at regular intervals. So, to meet your short-term goals along with the coverage for death during the policy term, you can bank on money-back life insurance plans. Additionally, the returns you make from these plans are tax-free as per Section 10(10D) of the Income Tax Act, 1961.

Whole Life Insurance Plans

These plans are defined by their name themselves. The policy will be with you throughout your life. They are usually for upto 99 years, as opposed to other life insurance plans that carry on for a maximum of 10-30 years. Of course, the premium payable on these plans is higher compared to other life insurance plans. Whole life insurance plans in India are suitable for people wanting coverage for those with financial dependents at an old age. Paying premiums successfully for five years makes you eligible for guaranteed income on maturity.

Wrapping Up

Life insurance plans in India have been helping families stand the test of time when their breadwinners die. Of the plans available, a term insurance plan is imperative to have. With an extended sum assured amount in exchange for a much lower premium, this plan is a must-have to meet your financial goals. For more insights on finance and other important matters, stay connected with zarooribaathai.in.