Types of Life Insurance
There are many life insurances available according to our needs and preferences. There are generally two types of life insurance known as temporary and permanent but can be classified as Term Insurance, Endowment policy, Unit-Linked Insurance Policy, Money back policy, Whole life insurance, Retirement or pension plan and Child Plan.
1. Term Insurance
These are the plans purchased for a fixed period of time usually 10-30 years, then they end. The period is chosen at the purchasing of the policy. There are also three types of term insurance plans i.e., decreasing term life insurance which is renewable term life insurance with coverage decreasing over the life of policy. Second is convertible as the name suggests allows policyholders to convert a term policy into a permanent one. and the third term insurance is a renewable plan in which premium increases annually and are least expensive in the beginning
There are also term insurance plans which come with maturity benefits known as term insurance with return of premium as normal term insurance doesn't give maturity benefits.
2. Endowment Policy
Endowment policy gives the policyholder coupled benefits of life insurance and savings. It helps to save money regularly over a period to get a sum at a maturity period. In case of death of a policyholder before maturity period the nominee will receive maturity benefit money.
These plans are suitable for policyholders who want guaranteed returns as well as protection of life. They also give a chance to benefit from bonuses which are paid additionally over and above the sum assured of your policy. The returns generated on maturity are tax free and can be claimed as a deduction under Income Tax.
3. Unit - Linked Insurance Plan
Unit - Linked Insurance Plan offers a combination of both investment and insurance. It is an insurance which covers life as well as generates money by investing in bonds, equities, hybrid funds, etc. and comes with a 5-year lock in period.
People purchase these insurance based on their risk taking as the money is invested in markets such as bonds which give less returns but are safer options and on the other hand there are open markets which give better returns but also come up with higher risks.
4. Money Back Policy
As the name suggests money back means money will be back but on a regular interval. In other words, a money back policy gives a percentage of the sum of money at a steady interval. This policy is best for short -term financial targets to achieve.
They are also tax free and can be claimed under Income Tax. These insurance policies also have maturity benefits as well as regular receiving of money at steady intervals. They are also good for your family in your absence as the maturity benefit will go to the nominee.
5. Whole Life Policy
Whole Life policy covers the insurer or the policyholder's whole 99 years of their life. They are tax free and can also be claimed under Income Tax.
If the policyholder is still alive then the maturity benefit will go to the policyholder otherwise the beneficiary will get the benefit. These insurances are generally taken for the purpose to secure their children's future.
6. Retirement / Pension Plan
These policies provide financial security and help you to create wealth after your retirement. Retirement plans provide options to withdraw money like lump sum payment, regular income or a combination of lump sum and regular.
7. Child Plans
Child Insurance Plans help to provide a better future for your child. These plans help you to build a significant sum for your child's education and marriage expenses. A child plan provides maturity benefit after the age of 18 years or can get annual installments. Child plans allow us to choose to invest either in equity, debt or balanced funds.
Premiums are based upon our choices i.e., regular or single according to capacity. These funds can also be used for emergencies and can make withdrawals after completing 5 policy years. It also gives critical illness and accidental death benefits.
Above given all plans are the best on their own but each person's capacity and preferences are different. So, here we will help you to choose the best insurance plans for your life and your loved ones so they don't have to go under a financial crisis when you are not around. Go get the insurance and make the future stress free for your family and loved ones.
