The most widely used insurance product on the market right now is life insurance. It is essential to every person’s financial portfolio. It offers the policyholder life insurance for an assured sum in return for an annual premium (it may also be paid monthly, quarterly, or half-yearly) for a predetermined time period. In the case of an unexpected death of the insured during the policy period, the policyholder’s nominees get the sum assured.
A predetermined sum assured may also be paid to the policyholder upon plan maturity. A maturity benefit is typically offered by unit-linked insurance plans and endowment policies. The many kinds of life insurance plans offered on the market, however, range substantially in terms of their aim and benefits beyond this fundamental resemblance of providing a life cover for an amount assured. Let’s examine them and choose which one would be most appropriate for you.
Types of life insurance plans
Given below are the common types of life insurance policies you can avail yourself in India:
1. Term Life Insurance Policy
The most popular kind of life insurance policy in the nation is term insurance. It is available for a set length of time or term, hence the name. A term policy does not provide maturity benefits, in contrast to other types of life insurance plans. However, it also provides a big sum assured for a relatively small premium. It is a fantastic asset to have for your loved ones’ financial stability while you are away. There are no benefits if the insured lives past the policy’s term. You could choose to use a return of premium benefit, which is offered by many insurance providers, in such a situation.
2. Whole Life Insurance
Unlike term insurance, which only covers you for a specific number of years, whole life insurance covers you for the rest of your life. Participating and non-participating plans are your two alternatives here. You can select the one that best suits your risk tolerance. When compared to its non-participating counterpart, the premium you pay for an insurance plan will be more expensive. However, the former enables you to get dividends on a regular basis. And it keeps rising with each passing schedule, as per the best personal finance blogs.
3. Endowment plan
Due to the maturity benefits it provides, an endowment plan enables you to receive payment even if you outlive your insurance policy. It combines aspects of savings and life insurance. The nominee receives the cash insured, the bonus, and any profit the policyholder made if the policyholder passes away before the plan expires. The length of the policyholder’s life will determine how much of a bonus they receive, says the Best Finance Blogs.
4. ULIP (Unit-Linked Insurance Plan)
The most well-liked life insurance product is the universal life insurance plan (ULIP). It allows you to simultaneously create wealth while ensuring your survival. It is the broadest type of insurance protection available. As per the best personal finance blogs, a portion of your premium is used to cover you by your insurer, and the balance is invested in the market in the fund of your choice. A person is free to choose the level of protection required and the type of fund he or she wishes to invest in. After the policy’s lock-in period, you can withdraw a portion of the money. And if you think your investment is underperforming, you can swap it to a different fund at no additional expense.