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1. Term Life Insurance Plan:
This life insurance plan offers monetary compensation to the beneficiary only if the
policyholder meets with an untimely demise during the policy period. If the insured
survives until the policy end date, the coverage ceases.
This plan does not feature any investment component or maturity benefit.
Therefore, it is the cheapest form of life insurance.
2. Term Life Insurance with Return of Premium Plan:
A term plan with a return of premium (TROP) is a variant of term insurance. These
plans offer a maturity benefit where you will be paid back all the premiums paid
(minus GST) towards the term plan upon surviving the policy term.
Premiums for these plans will be slightly higher than basic term plans. Like
pure-term plans, they also offer death benefits to your family in the event of your
demise. In simple terms, TROPs are term plans that offer dual benefits under a
single-term insurance plan.
3. Whole Life Insurance Plan:
This kind of insurance plan ensures coverage for a lifetime, provided the policy is in
force. Apart from providing a death benefit, a whole life insurance policy also
contains a savings component. The cash value accumulates on a tax-advantaged
basis. You may choose to withdraw the accrued cash value or even take a loan
against it. However, in case of the insured’s unfortunate demise before the loan is
repaid, the death benefits the beneficiary receives is proportionally reduced.
4. Endowment Policy:
In an endowment plan, the insurer provides a pay-out to the insured if he or she
survives until the maturity date. Otherwise, the sum assured is paid to the
beneficiary.
This insurance option offers dual benefits of protection and savings. Along with
providing life cover, it also helps the policyholder save regularly over time. A lump
sum amount accumulates by the time the policy matures. Most insurers also offer
guaranteed additions to the invested sum or declare bonuses, increasing the
returns from such policies.
Endowment plans are also commonly known as traditional plans since these are not
market-linked. While these serve as investment vehicles, the risk associated is far
lower than most investment products. Although more expensive than a term plan,
endowment plans can help achieve financial goals like a child’s higher education,
marriage, buying property, etc.
5. Money-Back Insurance Plan:
In a money-back plan, the money you invested as premiums comes back to you at
regular intervals as a guaranteed income. You are also eligible to receive bonuses
declared by the insurance company. Such policies can meet your interim needs for
funds.
6. Retirement Insurance Plans:
With these plans, you can create wealth and get a fixed income after your regular
salary stops. This is because the premiums you pay build up a sizeable amount
through the accumulation phase of such plans. After that, during the vesting period,
you start getting regular payouts from the accumulated sum.
In case of the policyholder’s unfortunate demise during the accumulation phase,
the nominee receives a death benefit. The annuity pension plan also allows you to
make provisions for your spouse to continue receiving the income after an
unwanted event.
7. Unit Linked Insurance Plans (ULIPs):
ULIP benefits are not limited to protection and wealth creation. Your premium is
divided into two parts. One part goes towards securing your life cover. The other is
invested in market-linked instruments.
If you survive the ULIP policy period, you receive the prevalent market value of your
investment. The capital market offers the possibility of generating
inflation-adjusted returns through long-term investment. Insurers also add extra
units to your investment as loyalty rewards when you remain committed to your
policy for a long duration. A ULIP plan calculator helps you gauge the amount you
need to invest in building the wealth required to fulfill your life goals. Also, in
financial emergencies, you can withdraw a part of your accumulated units after the
five-year lock-in phase.
In case of an undesirable event, your nominee receives a lump sum amount.
8. Child Plans:
You can invest in the plan in your child’s infancy and withdraw the savings once
your child reaches adulthood. If an unwanted event occurs during the policy period,
the child plans’ death benefit takes care of your child’s financial needs. But most
child plans also continue premium waived until maturity, providing a pay-out to
your child to meet their future monetary requirements.