Choosing from the different types of life insurance in India is a crucial financial decision, as it helps you protect your loved ones from life’s uncertainties. Still, you may not be fully aware of the types of life insurance policy in India and how they affect your financial health. Let’s check the types of life insurance and their benefits in detail below.
Also Read: Benefits of Term Insurance
Different Types of Life Insurance Policies in India
Following are the types of life insurance available in India: [1]
- Term insurance
- Term insurance with return of premium
- Unit Linked Insurance Plans
- Endowment plans
- Moneyback policy
- Whole life insurance
- Group life insurance
- Child Insurance Plans
- Retirement Plans
Let’s dig deeper into these categories to understand how to choose one of the types of life insurance policy in Indi
1. Term Insurance Plan
The term insurance plan is one of the most sought-after types of life insurance policies in India. This is one of the types of life insurance policy in India that you can buy for a specific period of 10, 20, 30 or more years, hence the name.
While some other types of life insurance policy offer maturity benefits, term insurance does not. It is one reason why term insurance, being the best insurance policy in India, is comparatively cheaper than other types of life insurance schemes.
Term insurance is pure life cover, unlike other types of life insurance policies which have a saving component. You can also opt for a significant life cover at a lower premium as compared to other types of life insurance policy which are costlier but have built-in saving components.
2. Term Insurance with Return of Premium
A term insurance plan is amongst the types of life insurance policies that provides a death benefit but no maturity benefit.
If you live a healthy lifestyle, the probability that you will outlive the best insurance policy in India you have bought also increases. For you, among the many life insurance types, a term insurance with return of premium is one of the best insurance policy in India, which also give you maturity benefits.
It is one of the types of term insurance plans that give back the premiums you pay on surviving the policy period. Besides, you can easily calculate premium for term insurance using an online term insurance calculator.
When you calculate premium for term insurance, you get a clear understanding about your unique requirements, explore rider options, and also choose your policy term. Doing so helps you ensure that you are investing in the most suitable types of life insurance policies for yourself and your family.
Also Read: 5 Things to Think Before Buying Life Insurance
If you want to support long term goals in life, for example, you could opt for a whole life insurance, and the factors to be considered here will be different. Keep in mind that your age and personal needs determine the most needed types of life insurance policies.
3. Unit Linked Insurance Plan (ULIP)
You may face a dilemma in life about choosing between any of the two options – investment or insurance.
A ULIP is one of the types of life insurance policies in India that fulfill both these aspects. Amongst different types of life insurance, it is the one that offers life cover along with investment opportunities. Being one of the types of life insurance, it has a lock-in period of five years, which makes it a long-term investment instrument that comes with risk protection. ULIPs also allow you to balance your funds as per market dynamics.
3. Unit Linked Insurance Plan (ULIP)
You may face a dilemma in life about choosing between any of the two options – investment or insurance.
A ULIP is one of the types of life insurance policies in India that fulfill both these aspects. Amongst different types of life insurance, it is the one that offers life cover along with investment opportunities. Being one of the types of life insurance, it has a lock-in period of five years, which makes it a long-term investment instrument that comes with risk protection. ULIPs also allow you to balance your funds as per market dynamics. citizen parents.
Also Read: Benefits of ULIP Investments
4. Endowment Policy
Endowment policies are one of the types of life insurance policies that provide you with the combined benefit of life insurance and savings. Along with giving you the life cover, these types of life insurance help you save money regularly over a period to get a lump sum at maturity.
What makes them one of the most useful types of life insurance policies is that they help fulfill long-term goals in life. You will also get the maturity amount if you survive the policy tenure.
Endowment policies, being one of the most appropriate types of life insurance plans, also help you create a financial cushion for your family to meet various financial objectives in life.
5. Moneyback Policy
The purpose of investing in the insurance policy in India for your loved ones can be to create wealth over an extended period. However, most of the types of life insurance do not provide any provision to get funds before their tenure ends. It is where a moneyback policy plays a vital role in solving the problem of liquidity.
As the name suggests, moneyback policies are one of the popular types of life insurance policies in India that give money back regularly.
5. Moneyback Policy
The purpose of investing in the insurance policy in India for your loved ones can be to create wealth over an extended period. However, most of the types of life insurance do not provide any provision to get funds before their tenure ends. It is where a moneyback policy plays a vital role in solving the problem of liquidity.
As the name suggests, moneyback policies are one of the popular types of life insurance policies in India that give money back regularly.
It pays a percentage of the assured sum throughout the policy tenure, unlike other types of life insurance plans that offer no returns till maturity.
6. Whole Life Insurance
As a life insurance policyholder, you get the benefits depending on the types of life insurance policies you have chosen. What distinguishes a whole life insurance plan from other life insurance types is that it provides insurance coverage to the insured for the entire life, up to 100 years of age.
Typically, the death benefit, under a whole life insurance, is payable to the beneficiary in the case of the untimely demise of the policyholder. On the other hand, you are eligible to receive a maturity benefit under a whole life insurance policy if you cross 100 years of age.
Another significant feature of such whole life insurance plans is that some offer the option to pay premium for the first 10-15 years while you get the benefits for the entire life.
7. Group Life Insurance
Just like group health insurance, group life insurance is one of the types of life insurance policies that covers a group of people under one master policy. Such life insurance types are generally provided as part of an employment benefit.
A unique feature of these types of life insurance products is that you will get the insurance cover if you remain a part of the group. It is different from the individual types of life insurance plans in which the coverage continues throughout the chosen policy tenure.
8. Child Insurance Plans
When it comes to life insurance types, a child plan is an investment+insurance plan that helps you meet your child’s financial needs. A child insurance plan will help you create wealth for your child’s future needs like education.
You can start investing in these plans from the birth of your child. You get the flexibility of investing your hard earned money into several funds on the basis of your financial condition and goals in mind.
9. Retirement Plans
Retirement Plans are amongst the types of life insurance policies that provides financial security and help you with wealth creation after your retirement. With Retirement Plan, you will get a sum of money as pension in the vesting period.
In case of your untimely demise during the policy term, your nominee will get the death benefits. Retirement Plans comes with death benefit as well as vesting benefit providing protection to you and your family members.
Different Types of Life Insurance Plans from Max Life Insurance
Following are some of the plans offered by Max Life Insurance:
S. No. |
Types of Life Insurance |
Name of the Plan |
UIN |
1. |
Term Insurance |
UIN: 104N113V04 (Non Linked Non Participating Individual Pure Risk Premium Life Insurance Plan) |
|
2. |
Term insurance with return of premium option |
UIN: 104N113V04 (Non Linked Non Participating Individual Pure Risk Premium Life Insurance Plan) |
|
3. |
Unit linked insurance plan |
UIN: 104L082V04 (Unit Linked Non Participating Individual life insurance plan) |
How to Buy Life Insurance Policy in India?
The ultimate purpose of buying any of the types of life insurance plans in India is to provide life cover to you and financial protection to your family members. To make sure that you have the best possible insurance coverage, you can first calculate premium for term insurance using term plan calculator.
When you calculate premium for term insurance, you get a overview of what you insurance plan looks like, what customization or add-on options are available, as well as realize your affordability – all of this helps you invest in the best types of life insurance policies, be it whole life insurance or term insurance, to name a few.
While you calculate premium for term insurance, you just need to follow a few easy steps, and you get an understanding about what premium you need to pay, then you can compare plans, and choose the best one.
With insurance policy in India adorning your portfolio, you can ensure that your family members receive the sum assured as defined under the policy terms.
Choose the Best Life Insurance Policy in India for Adequate Coverage
Choosing one of the types of life insurance policies in India is not easy. It is because the decision forces you to think about the unfortunate events that may occur in your life. Then, there is a financial aspect of investing in various types of life insurance plans.
You might have assumed you need to choose a life insurance policy in India from the array of available variants. However, the decision of the insurance policy must depend upon how much life cover you need.
For instance, if you want to ensure financial security of your family in your absence, then you need to purchase a term insurance policy, after carefully evaluating the financial needs and various factors relating to the insurance policy .
Choosing one of the types of life insurance policies in India is not easy. It is because the decision forces you to think about the unfortunate events that may occur in your life. Then, there is a financial aspect of investing in various types of life insurance plans.
You might have assumed you need to choose a life insurance policy in India from the array of available variants. However, the decision of the insurance policy must depend upon how much life cover you need.
For instance, if you want to ensure financial security of your family in your absence, then you need to purchase a term insurance policy, after carefully evaluating the financial needs and various factors relating to the insurance policy .
Also Read: 5 Things to Think Before Buying Life Insurance
If you want to support long term goals in life, for example, you could opt for a whole life insurance, and the factors to be considered here will be different. Keep in mind that your age and personal needs determine the most needed types of life insurance policies.
Frequently Asked Questions (FAQs)
Q. What are the main types of life insurance policies in India?
A. Following are the different types of life insurance policies that are available in India:
- Term Insurance
- Term insurance with return of premium
- Unit Linked Insurance Plans
- Endowment plans
- Moneyback policy
- Whole life insurance
- Group life insurance
- Child Insurance Plans
- Retirement Plans
Q. What are the benefits that different types of life insurance policies offer?
A. Following are the primary benefits of life insurance plans in India:
- Financial Security
- Life Coverage
- Long Term Savings
- Investment Options
- Tax Benefits under Section 80C & 10 (10D) of income tax act 1961. As per prevailing tax laws subject to change
Q. What are the life insurance tax benefits?
A. You can avail various tax benefits with several life insurance policies in India. Under Income Tax Act, 1961, you can avail deductions under Section 80C up to Rs.1.5 lakh on the life insurance premium paid. Also, nominee can claim tax deduction under Section 10 (10D) on the insurance payouts received.
Q. What are the different types of Insurance in India?
- A. Following are the types of insurance in India:
1. General Insurance
Following are the various types of general insurance in India:
- Health Insurance
- Motor Insurance
- Home Insurance
- Fire Insurance
- Travel Insurance
2. Life Insurance
Following are the various types of life insurance policies available in India:
- Term insurance
- Term insurance with return of premium
- Unit Linked Insurance Plans
- Endowment plans
- Moneyback policy
- Whole life insurance
- Group life insurance
- Child Insurance Plans
- Retirement Plans
Q. What Is A Whole Life Insurance?
A whole life insurance is a type of insurance plan that provides an extended life coverage until the death of the policyholder. In most cases, a whole life insurance policy stays in force all throughout the policyholder’s life, given they regularly pay the premiums.
Under a whole life insurance policy, the sum assured or the life cover gets decided during the time of policy purchase, and the same is paid to the policy nominee at the time of claim – when the life assured (policyholder) dies.
Usually, for most whole life insurance policies, the standard maturity age is 100 years, and in case the policyholder passes away before completing 100 years, then the sum assured is paid out to the nominee. However, in case the policyholder outlives the age of 100 years, then the insurance provider pays out the matured endowment coverage to the policyholder.
Q. Is it complicated to calculate premium for term insurance online?
No, using an online insurance calculator to calculate premium for term insurance is very easy. When you calculate premium for term insurance online, you need follow a few, simple steps, that require your input, such as:
1. Personal Details (Name, Gender, Date Of Birth, Annual Income, etc,.)
2. Critical Insurance Values (Sum Assured, Policy Tenure, Premium Payment Duration, etc,.)
3. Choose Add-On Rider options (Accidental cover, Critical illness, future waiver of premium, premium break, etc,.)
By entering these information, you can effortlessly calculate premium for term insurance, and compare plan to buy the best one.
Q. Is whole life insurance expensive than term plan?
Usually, whole life insurances have higher premiums when compared to term insurances. However, unlike term insurance, where the premiums increase at the time of renewal, with whole life insurance, the premiums stay the same for your whole life.
Q. Can I purchase two different types of life policies at same time?
Yes, you can absolutely buy different types of life insurance policies. Typically, many individuals invest in multiple life insurance types to create a well-rounded investment and financial portfolio.
Q. How much does life insurance cost?
Different types of life insurance policies have different premium rates, as it takes into consideration a lot many factors such as age, annual income, existing medical conditions, liabilities and more. However, amongst the many life insurance policies in India, one of the most affordable option is term insurance, given you buy the policy as early in your life as possible.
Q- Are riders a type of life insurance policy?
No. Riders are optional add-ons that you can avail in order to enhance your existing life insurance cover and they cannot be purchased independently. Some examples of riders in life insurance policies include accidental death, critical illness, future waiver of premium, premium break, etc. Opting for riders can increase the premium payable for the policy but these add-ons can provide you additional protection against various risks.
Q- Will my existing life insurance policy premium increase due to COVID-19?
No. Even though there are news reports that life insurance premiums are increasing as a result of COVID-19, this change will impact individuals who are buying new life insurance policies. If you have an existing policy your life insurance premium will not increase currently.
Source:
[1] http://www.policyholder.gov.in/What_Life_Insurance_to_Buy.aspx
https://www.sbilife.co.in/en/knowledge-centre/insurance-basics-financial-advice/what-is-rider-in-insurance
https://www.businessinsider.in/personal-finance/news/premiums-on-new-life-insurance-premiums-for-both-term-plans-and-endowment-are-rising/articleshow/88889744.cms
https://www.sbilife.co.in/en/knowledge-centre/insurance-basics-financial-advice/what-is-rider-in-insurance
https://www.businessinsider.in/personal-finance/news/premiums-on-new-life-insurance-premiums-for-both-term-plans-and-endowment-are-rising/articleshow/88889744.cms
ARN:- Aug22/Bg/25F
Disclaimer:
Savings mentioned are indicative of the maximum premium difference when the same plan/variant is bought offline