Life insurance is useful for you as well as your family.
Life Insurance is useful for you as well as your family. If someone is the sole breadwinner of the family, then after his death, life insurance can provide some financial relief to the people dependent on him. Life insurance is not just one type. Some policies give you cover as well as the option to get returns through investments. You can choose from 7 types of life insurance policies depending on your need…
1. Term Insurance Plan
This plan can be purchased for a fixed period of time, such as 10, 20 or 30 years. Under this plan, you get coverage for a tenor ie the tenure chosen by you. There is no maturity benefit in such a life insurance policy. They provide life cover without the savings/profit component. Hence, they are cheaper as compared to other policies. In term insurance, on the death of the policy holder during the policy term, the Sum Assured under the policy is paid to the beneficiary.
2. Endowment Policy
This type of life insurance policy has both insurance and investment. This policy has a risk cover for a specified period and at the end of that period the sum assured along with the bonus is returned to the policyholder. The face value of the policy amount is paid under the endowment policy on the death of the policyholder or after the specified number of years. Some policies also pay in case of critical illness.
3. Moneyback Insurance Policy
This policy is a kind of endowment policy only. This policy also has a combination of investment and insurance. The difference is that in this life insurance policy, the sum assured along with the bonus is returned in installments during the policy term itself. The last installment is available at the end of the policy. If the policyholder dies during the policy term then the entire Sum Assured gets to the beneficiary. However, the premium of this policy is the highest.
4. Lifelong Life Insurance
In Lifelong Life Insurance ie Whole Life Insurance Plan, you get protection for life. That is, the policy has no term. On the death of the policyholder, the nominee gets the claim of insurance. Other life insurance policies have a maximum age limit, which is usually 65-70 years. After that, the nominee cannot take the death claim in case of death. But under Life Life Insurance, the nominee can claim even if the policyholder has died at the age of 95 years. The premium of this policy is very high. Under this policy, the policyholder has the option to partially withdraw the sum assured. Apart from this, he can also take money in the form of loan against the policy.
5. ULIPs
Both protection and investment remain in this plan as well. The returns you get in traditional endowment insurance policies and moneyback policies are assured to an extent, whereas there is no guarantee of returns in ULIPs. This is because the portion invested in ULIPs is invested in bonds and stocks and you get units like mutual funds. In this case, the returns are based on the volatility of the market. However, you can decide how much of your money should be invested in stocks and how much money should be invested in bonds.
6. Retirement Plan
Life insurance cover is not available in this plan. It is a retirement solution plan. Under this, you can build a retirement fund by assessing your risk. After a specified period, you or the beneficiary after you will be paid a certain amount as pension. This payment can be on monthly, half yearly or yearly basis.
7. Child Insurance Policy
These plans have been designed keeping in view the education expenses and other needs of the children. In a child plan, a lump sum amount is paid after the death of the policyholder but the policy does not lapse. All future premiums are waived off and the insurance company continues to invest on behalf of the policyholder. The child gets money for a certain period.
