A life insurance cover is a necessity for all. It provides financial protection against life risks. Read on to know more about the types of life insurance policies available in India.
Over the years, life insurance in India has evolved tremendously and has grown by leaps and bounds. Today, the insurers offer a variety of insurance plans to suit the varying needs of the people. If you are looking to buy an insurance policy for your family, you can consider buying the following life insurance plans:
A term life insurance policy is one of the most popular, affordable, and simplest insurances in India. It protects your family against the death risk for a specific period (limited to the policy tenure). In the event of the policyholder’s unfortunate demise within the policy period, the insurance company pays the sum assured to the nominee. The amount is usually paid in a lump sum or as a monthly payout as per the policy terms. However, if the policyholder outlives the tenure, there is no survival payout.
Generally, the term insurance policy tenure ranges from five to 15 years, and you must pay the premium periodically throughout the term to keep the policy active. Additionally, most insurance companies in India give the term life insurance policyholders the flexibility to purchase additional riders and widen the coverage scope.
Over the past few years, Unit Linked Insurance Plans have gained immense popularity mainly because it provides the dual benefits of protection and investment. A part of the premium that you pay for the policy is used for risk protection and the remaining amount is invested in various money market investment instruments. Depending on your risk-taking capacity and your financial goals, you can allocate the funds in debt or equity-oriented investments and get valuable returns.
Not to forget, the premium paid for the life insurance policy is eligible for tax benefit to a maximum limit of Rs. 1.5 lakhs in a financial year under Section 80C of the Indian Income Tax Act, 1969. Thus, ULIPs help you protect your family against risks, get returns on your investment, and build a corpus and reduce your annual tax liability.
Whole Life Insurance
As the name suggests, a whole life insurance plan provides coverage for as long as you live (usually up to 100 years). Recently, there has been significant growth in the number of whole life insurance buyers as it assures protection even during old age. The sum assured and the policy duration are decided at the time of buying the policy. In the event of the policyholder’s death, the insurer pays the sum assured amount to the nominee along with the accumulated bonus (if any).
Child Care Insurance
A child insurance plan helps you build a corpus for your child’s future expenses such as overseas education, marriage, etc. Typically, the child care plans offer a one-time lump sum payout after the child attains the maturity age (18 years). You can buy a child care plan when your child is young and continue to invest a small amount and a sizeable corpus over the years. In the event of your unfortunate demise during the policy period, the insurance company pays the accumulated wealth immediately to the child or the family.
In some cases, depending on the policy terms, the insurer allows the policy to continue and waives off the premium payment for the remaining policy tenure. After maturity, the child receives a lump sum pay out.
Apart from the above-mentioned life insurance types, there are other plans like a retirement plan, endowment plan, money back plan, savings, investment insurance plan, etc. Each of these life insurance plans has unique features and benefits. Make sure that you assess your needs first and choose the insurance policy accordingly to get maximum value.