Different types of life insurance policies are available. In this post I will talk about some of the most popular types of life insurance available in India.
# 1 Types of Life Insurance in India – Term Insurance
A term insurance policy is a pure risk cover policy that protects the person insured for a specific period of time. It provides life cover without any savings / profits component.
In a term insurance policy a person has to pay a premium to the company every year for his specified chosen period.
- If he dies during the period of the policy, his beneficiary will get the full sum assured.
- If he survives, he will not receive any benefit.
For example, if Mr Radhegobino buys a Rs 50 lakhs policy for 25 years, his family is entitled to receive the sum of Rs 50 lakhs if Mr Rahdegobindo dies within the 25 year period.
A term insurance policy is cheapest form of life insurance as premiums are much lower in comparison to other life insurance plans.
You may read this review on LIC e-Term Plan. This is an online term life insurance policy offered by LIC, the biggest, oldest and most trusted insurer in India.
# 2 Types of Life Insurance in India – Endowment Policy
An endowment policy tries to combine risk cover with financial savings. The major difference between a term insurance policy and endowment policy is with respect to maturity benefits.
In an endowment policy,
- If a person dies during the period of the policy, his beneficiary will get the sum assured.
- If he survives the policy tenure, he will generally get back all the premiums paid, along with benefits like bonuses.
Some insurers also offer additional benefits like marriage and education endowments, double endowments and so on.
Given the maturity benefit aspects, endowment plans are expensive compared to term plans.
# 3 Types of Life Insurance in India – Money Back Life Insurance Policy
Money back policy is a variant of an endowment policy.
A Money back policy offers the payment of partial survival benefits when the insured is still alive. The insurance company pays a portion of the sum assured is at regular intervals.
If the insured person dies during the period of the policy, the beneficiary gets the full sum assured
# 4 Types of Life Insurance in India – Whole Life Policy
A whole life policy covers a person for his entire life from the time the policy is taken.
The person will avail himself of a cover throughout his life. He has to pay regular premiums until his death at which point his beneficiary gets the full amount.
# 5 Types of Life Insurance in India – Group Life Insurance
A group life insurance is an insurance policy where a group of people have been named under a single policy
Employers generally add many employees under the same policy
# 6 Types of Life Insurance in India – Unit Linked Insurance Plan
Unit Linked Insurance Plan or ULIPS are an insurance product where the insured person’s money is invested with the intention of earning additional income. ULIPs are supposed to provide a combination of life cover along with an opportunity for wealth creation.
ULIPs are essentially a variant of the traditional endowment plan and pay out the higher of sum assured or the investment portfolio on death/maturity.
You may also like
- Introduction to Life Insurance
- Review on LIC e-Term Plan
- Pradhan Manti Surakhsa Bima Yojana
- Atal Pension Yojana Scheme Review
- 5 Key Steps of Wealth Creation
A Few Last Words
Before making any investment decision, please contact your financial adviser. I have provided this article for educational purpose only.
I hope you found this article on Types of Life Insurance in India useful. If you have something to add please leave a comment in the post. Please feel free to contact me.