Types of Life Insurance Policies in India - Gujju Gk

10 January 2023

Types of Life Insurance Policies in India

 Types of Life Insurance Policies in India 

He eccentricre are the basic types of life insurance policies. All other life insurance policies are built around these basic insurance plans by adding various other features.

[10/01, 1:39 pm] parmarjignesh1717: It is important to know about the types of life insurance policies in order to choose the right one. A life insurance policy provides financial protection to your family in the unfortunate event of your death. At the basic level, it involves paying a small amount every month which is called premium. On maturity of the policy,

[10/01, 1:40 pm] parmarjignesh1717: Depending on the type of life insurance policy you choose, you will receive the returns that the policy has earned over the years. Also, in case of untimely death of the policyholder during the term of the policy, your family will receive a lump sum amount.

Today, there are many variations on this basic theme and the types of life insurance policies meet different needs such as:

* planning for your retirement

* saving for a specific goal in the future

* planning your children's education

* Ensuring flow of income in case of loss of your earning capacity

How many types of life insurance are there?

There are many types of life insurance. The basic types are given below. All other life insurance policies are built around these basic insurance policies by adding various other features.

1. Term Insurance

A term insurance policy which is now also available as e-term insurance policy is a cover policy that protects the life insured for a specified period. In this type of life insurance policy, on the death of the policyholder within the policy term, a fixed amount is paid to the beneficiaries, which is called the sum assured.

Case 1: If a person buys a policy of ₹2 lakh for 15 years, his family is entitled to an amount of ₹2 lakh if ​​he dies within a period of 15 years.

Case 2: If the policyholder survives for a period of 15 years, though the premium is not paid, financial protection is offered to the family.


* Income Tax Exemption: The premium paid for term insurance provides income tax exemption

* 100% Risk Cover: These insurance policies provide 100% risk cover and hence they do not have any additional charges other than the basic minimum premium

* Lowest premium: The premiums paid for term life insurance policies are the lowest in the life insurance category.

2. Whole Life Policy A whole life policy covers a policyholder against death throughout his life. The validity of this life insurance policy is not defined and hence the person enjoys life insurance throughout his life. Under this life insurance policy, the policyholder pays regular premiums till his death, upon which the amount is paid to the family.


* Long Term Cover: The policy does not lapse until an unfortunate event happens to the individual.

* Tax Benefit: The premiums paid under whole life policies are tax free.

* Enhanced protection: Increasingly, whole life policies are being clubbed with other insurance products. Various types of requirements like retirement planning, etc.

3. Money Back Policy This life insurance policy is preferred by many as it offers periodic payouts during the term of the policy. In other words, a portion of the sum assured is paid at regular intervals. If the policyholder survives the term, he gets the remaining sum assured.


* Corpus Benefit: In case of death during the policy term, the beneficiary gets the full sum assured.

* Choice of ULIP versions: Various life insurers are also offering new ULIP versions of money back policies.

* Tax benefit: Premiums paid and returns deposited though money back policy or its ULIP variants are tax-free

4. ULIP ULIPs are market linked life insurance products that provide a combination of life insurance and wealth creation options. A part of the amount that people invest in ULIPs goes towards providing life cover, while the rest is invested in equity and debt instruments to maximize returns.


* Flexibility to invest: ULIPs provide the flexibility to choose from a variety of fund options depending on the risk appetite of the customer.

* Aggressive Fund: Invests extensively in the equity market with the objective of high capital appreciation.

* Conservative Fund: Cash, bank deposits and other instruments, invest in debt markets with the objective of preserving capital while providing stable returns.

*Long Term Planning: ULIPs can be useful for achieving various long term financial goals such as retirement planning, child's education, marriage etc.

5. Annuities and Pensions

In these types of life insurance policies, the insurer agrees to pay a specified amount periodically to the insured. The objective of annuity is to hedge against financial risks as well as provide money in the form of pension at regular intervals.

6. Endowment Plan

Endowment plans are among the popular life insurance policies as it combines risk and financial savings. A pure endowment policy benefits the policyholders in two ways. In case of death during the tenure, the beneficiary gets the sum assured. If the person survives the policy term, he/she gets back the premiums paid along with other investment returns and benefits like bonus.

Thus, whatever be your financial requirements, there is a wide variety of insurance policies to ensure that your requirement is met as per the plan. To make the most of your hard earned money, you must consider the types of life insurance policies available and choose the one best suited for your needs.

No comments:

Post a Comment