Insurance 101: What 7 Types of Life Insurance Policies Are Available in India?
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Insurance is one of the most important investments you’ll make throughout your lifetime. While it may seem like a waste of money, to begin with, having an insurance policy is one of those things you’ll be so grateful you did when you need it. If you don’t get some, you’re going to regret it.
However, insurance isn’t just a static thing. There are plenty of different types and variations to think about, and you’ll need to pick the one(s) that’s right for you. With this in mind, today we’re going to explore the seven common types of life insurance policy that’s available in India today.
1. Child’s Plan
One of the biggest worries you’ll have as a parent is making sure your child is financially covered, even after you’re gone. Fortunately, a child’s plan insurance has you covered. If you pass, a Child Plan will pay annual payments to your child, or a lump sum, up until the age of 18 years’ old.
2. Term Plan
This is referred to as the most basic form of insurance and is perhaps the easiest to understand. You simply pay for a period of time you want to be covered for, known as a term, and if you die during this time, you’ll be given a high payment upon death.
Depending on your provider, you’ll have different options and bonuses you’ll be able to enjoy and benefit from. You can find out more on term plans here.
3. Unit Linked Insurance Plan (ULIP)
ULIP life insurance plans are found in India and are typically used to cover specific types of risk. This type of life insurance plan is different because the premium you pay will go against you as risk cover, whereas another part of it will be invested in funds which have been decided by your providers.
This is a great long-term investment option because the more you pay in over a longer period of time, the more money you’ll get in return. You can also reinvest your premium into more equity if you’re willing to take the risk, but it’s entirely up to you.
4. Whole Life Insurance
As the title suggests, a Whole Life Policy is an insurance policy that will cover you for your whole life, unlike a plan that only covers a specific, predefined term. The sum you’ll receive is defined and this is what will be paid out. If you live to be 100 years old, you will usually receive an amount before your policy is matured.
5. Retirement Plan
As you can expect, a retirement plan helps you to plan and save for your retirement. These plans usually last up to 60 years old, but if you pass away during this time, a lump sum, averagely around 105% of your premium, will be paid out to a nominee. If you don’t pass away, you can receive your premium back to use it for your retirement.
6. Endowment Plan
Another form of insurance, this time in the form of both savings and insurance is an Endowment Plan. While some of the premium and return is used as insurance, the rest is then invested by your insurance provider. This is typically a low-risk venture that will make both you and the insurance company money which you can then withdraw into your balance.
7. Money Back
A Money Back policy is a very special type of life insurance policy that’s unique in its own right. Upon passing, your loved ones won’t receive a large pay-out, but a set percentage will be paid out over a certain period of time. However, there are also plenty of benefits typically offered, which is why people are inclined to opt for this policy. It’s also ideal for policyholders looking for money in the short-term.
As you can see, there are plenty of different types of life insurance options out there for you to choose from, it’s all about finding the one that works for you. Research your options, think about what you need, and you can be sure you’ll be making the right investment for your life and situation.