Thanks to the increasing awareness, especially among young working professionals, people now understand the importance of a life insurance policy. In case of your unexpected death, a life insurance policy will provide your family with the much-needed financial support. While no amount of money can ever make up for the loss of a dear one, the financial help could at least reduce the impact of loss to an extent.
But to make the right life insurance buying decision, you first need to understand the different types of insurance products available in the market. Whether you've decided that you want to purchase life insurance or just thinking about getting one, a look at some of the most popular types of life insurance policy plans will surely help you make the right decision-
1. Whole Life Insurance
As the name suggests, Whole Life Insurance offers coverage throughout your life as long as you continue paying the policy premium. The sum assured is fixed when you purchase the policy, and this amount is paid to the nominee in case of your death.
There is also a cash value component in such life insurance plans which increases with time. This cash value is also given to the policy nominee in the form of a bonus.
2. Term Insurance
Unlike a whole life insurance policy, a term plan comes with a limited duration. In case if the insured passes away during this duration, the insurance company will give the coverage amount to the nominee. These are pure risk cover plans that have low premiums and still offer high coverage.
Apart from the term policies from private and public insurance providers, the PM insurance scheme is also an excellent option if you are looking for a highly affordable term plan.
3. Wealth Insurance Plan
A wealth insurance plan combines protection and saving. Some amount from your premium is kept as life cover while the insurance company invests the remaining. If you outlive the policy duration, you will receive the maturity amount.
However, if you pass away during the policy duration, the nominee will receive the death benefit.
4. Pension and Retirement Plan
One of the best life insurance policy in India to plan your retirement is a pension and retirement plan. This type of policy combines investment and saving. It allows you to select a retirement date after which you or your family members in case of your death receive a regular pension.
It also provides the flexibility of selecting how you or your family members would like to receive the pension amount.
5. Unit Linked Plans (ULIPs)
If you are looking to invest but also want life insurance, a unit-linked plan can be a great option. Some part of your premium is kept for the risk cover while the rest is invested in funds. The insurance providers offer many different types of funds to suit every type of investor.
In such types of life insurance policy, the cash value of the plan changes as per the NAV (Net Asset Value) of the underlying assets.
Selecting the Right Life Insurance Policy
Rather than choosing a life insurance plan based on a recommendation from your friend or relative, it is better to understand your needs and do your own research. While the different types of life insurance of India offer various benefits, no single type of insurance is ideal for everyone.
So, try to thoroughly understand the different policies and match them with your objectives to make an informed decision.
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